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Small Business Divorce Lawyer in Richmond, Texas

Representing Small Business Owners in Their Divorce

Are you planning to get a divorce? If you own a small business, you will have special needs during your divorce. It is important to be familiar with the potential problems that could arise during your divorce proceeding.

The small business divorce lawyers at The Vendt Law Firm, P.L.L.C. can walk you through your divorce from start to finish, working tirelessly to protect both your personal well-being and your business.

Get in touch with us today to learn more about divorce as a small business owner. Call (832) 276-9474 today.

Businesses as Community Property

Texas is a community property state. This means most property and assets acquired during the marriage are considered owned by both spouses and subject to a division that is considered “just and right.” It is likely that at least a portion of the value of your business is considered a marital asset and, in turn, community property. How much of your business is community property depends on whether you created and developed your business during the course of your marriage or before.

According to Texas law, if your business was founded before your marriage, or it was founded using “separate funds” — that is, funds that predated the marriage and that one spouse acquired through inheritance or a gift — then the business itself is considered separately owned. However, this does not mean that there isn’t a community property aspect to the business that must be dealt with during the divorce.

Your business may be considered community property if:

  • The value of the business now is more than it was before the marriage, and that increase in value occurred due to the financial and labor contributions of both spouses
  • Joint finances were used to expand the business
  • The spouse played a role in the operations of the business during the time of the marriage

As a business owner, one of the first things to do when determining the divisibility of the business is to speak to a business appraiser. A business appraiser will take a comprehensive look at the business, including financial statements and tax returns. In addition, the appraiser will consider intangible assets, such as the “goodwill value” of the company. There are two types of goodwill, in terms of business valuation: professional goodwill, which is how much the reputation of the business owner contributes to the success of the company and is considered separate; and the enterprise goodwill, which is the reputation of the business itself, and is considered divisible as community property. The appraiser will also consider the assets and liabilities of the business, the profits, and what similar businesses in the region have sold for when determining the business’ value.

Once a value is determined, an experienced divorce lawyer can help you to consider how much of that value is community property and, when considered along with other assets that must be divided in the divorce, what a right and just division might be.

Is Selling the Business Mandatory?

Getting a divorce does not necessarily mean you have to sell your business. Texas does not require splitting marital property right down the middle, but rather to split it in a way that is “just and right” for both parties. There are a number of options for dividing marital property in a way that is equitable yet still allows the business to be retained and continue operating.

As with all assets to be divided in the divorce, the court will consider a number of factors, including:

  • The grounds for the divorce and who, if anyone, was “at fault”
  • The earning power and future employability of both spouses
  • Who has custody of the children
  • How the other assets are divided—for example, one spouse will own the family home and other assets, while the other continues to keep and own the business

Options for Dividing a Business in a Divorce

There are three common ways that the value of a business can be divided in divorce:

The value of a business can be divided in a divorce by:

  • Selling the business and splitting the proceeds. This is sometimes the best way to ensure that each spouse gets an equitable share of the value of the business. However, there are some problems with this method, including if the business takes a long time to sell, market fluctuations that may impact the value of the business, or if the spouses disagree on the value.
  • A buy out. This option provides for one spouse to “buy out” the other spouse’s ownership in the business. This involves either a lump sum being transferred from one spouse to the other, or an agreement between the two whereby the buyer pays back the seller over time. Sometimes, spouses are able to barter other assets if the buyer does not have enough cash on hand to pay for his or her spouse’s portion of the business outright.
  • Co-ownership. While the idea of divorcing spouses continuing to own and operate a business together seems implausible, people have done it and have made it work. Just because a couple doesn’t want to continue living together and being married, doesn’t always mean they cannot remain amicable enough to keep the business intact as it is.

Let Our Richmond Small Business Divorce Lawyer Help You!

Determining how your divorce impacts your business and how to separate it in a fair and equitable way calls for an open mind, legal experience, and some creativity. An attorney from The Vendt Law Firm, P.L.L.C., can help you explore all of the options that are available to you and provide the guidance you need to protect your property rights, ensure that you receive your fair share, and avoid legal loose ends that can cause problems in the future.

To schedule a consultation with our Richmond small business divorce lawyer, call us at (832) 276-9474.
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