How To Determine Business Marital Property

If you are a business owner contemplating divorce or are already in the process of one, you are probably already aware of the importance of protecting your rights to your business during this time. Gray Becker, P.C. has been helping Texans with their legal needs since 1983. Our Austin, TX divorce lawyer has helped people in situations like yours before and is ready to help you too.

When a divorce involves a business, one of the most important steps is figuring out how much the business is worth. Whether you own the company alone or share it with your spouse, the outcome of the valuation process can affect your financial future. The valuation may also influence decisions about spousal support, property division, or how other assets are split.

Is Your Business Marital Property?

Depending on several factors, a business may be considered marital property. If this applies to you, it is important to know about your legal options for dividing this marital property. Businesses that were created or grew in value during the marriage are often subject to division, even if only one spouse was actively involved in running the company.

In Texas, courts use the concept of community property, meaning that most assets acquired during the marriage belong to both spouses. However, the specific facts of your case—such as when the business was founded, how it was funded, and how much each spouse contributed—will play a role in determining what portion, if any, is considered community property.

Methods For Valuing A Business

There are several approaches used to determine a business’s value during divorce. These commonly include:

• Asset-Based Approach – Adds up the total value of business assets and subtracts liabilities.
• Income Approach – Calculates the value based on projected future income.
• Market Approach – Compares the business to similar companies that have recently sold.

The method used often depends on the type and size of the business. Accurate and current financial records are critical for any of these methods to be reliable.

Protecting Your Interests

Having a good family law lawyer on your side who is also experienced with helping clients protect their businesses during divorce can protect your interests and help you avoid common mistakes people make during a divorce. Mistakes such as undervaluing the business, not keeping financial records up to date, or agreeing to unfair settlements can have long-term effects. We help clients make informed decisions based on accurate information and a clear understanding of their legal options.

We also encourage business owners to think about the long term. Keeping ownership and control of the business often matters just as much as its value at the time of divorce. In some cases, a buyout or asset trade may be the right approach. We walk through those options with our clients so they can choose what works best for them.

Gray Becker, P.C. was recognized in Best Lawyers, Best Law Firms in partnership with U.S. News & World Report, 2023, as well as in Austin Top Attorneys 2020. We have over 100 years of collective experience defending the legal rights of our clients. If you need help with a divorce, family law, or other legal matter, we are here to help. Reach out to us today.