4 Ways to Divide a Business During Divorce
Some couples going through a divorce have an extra type of community property under Texas law that must be divided: a business. If there is a business in the community, this can be a significant asset, and it should not be handled lightly.
Businesses subject to division upon divorce are usually small businesses. These are not stock interests of a publicly-traded company. Typical examples are:
- Medical practices
- Accounting firms
- Law firms
- Real estate brokerages
- Retail stores
Options for Business Owners in Divorce
Buying out your spouse. If there are enough assets, you may be able to buy your partner out of the business. This is usually preferred by the spouse who works the most in the business. The amount of the buyout will be determined by a business valuation conducted by a professional.
Get bought out. Your spouse may want the business, in which case, he or she will have to pay you in some way for your share.
Sell the business and divide the profits. This can only happen if you can find a buyer, which can be hard for businesses.
Continue ownership. This is not an option for everyone, but some couples find that they are able to continue their business relationship.
Is the business part of the community?
In order for the business to be divided upon divorce, it must be part of the community. If the business is separate property, it will not be subject to divorce proceedings. A prenuptial agreement, for example, could keep a business as separate property.
If the business was created during the marriage and there is no prenup, the business likely belongs to the community. If the business was created before the marriage, you must conduct a valuation of the business on the date of the marriage and a valuation on the date of filing for divorce to determine how much the business is worth so that it can be equitably divided.
Contract a Katy, TX Property Division Lawyer
If you and your spouse own a business and are getting divorced, you are advised to hire an attorney. There are many variables at play, and having an attorney will mean that you get the assets your are entitled to under Texas law.
Call Richmond, TX family law lawyer Frank J. Vendt, Jr. at The Vendt Law Firm, P.L.L.C. to schedule your meeting at (832) 276-9474.