Splitting Business Assets During Divorce

Getting a divorce is stressful even under the best circumstances but when a couple has a business together, how to divide assets can be especially complicated and taxing for everyone who has interests involved. Gray Becker, P.C. has been helping Texans with a wide array of legal needs since 1983 and our preeminent Austin, TX divorce lawyer team is available to discuss your situation and come up with a plan to protect your interests and in many cases, your brand and its reputation.

Business Assets And Texas Divorces

In Texas, which is a community property state, most assets and debts acquired during the marriage are generally subject to division. This includes businesses that were started or significantly grown during the marriage. Whether both spouses actively participated in running the business or only one did, the value of the business can still be considered part of the marital estate. If you are seeing signs that you might need a divorce lawyer or want to know about your legal options for dividing marital property, speaking with a lawyer early on can help to protect your assets and interests.

Determining What’s Divisible

The first step in splitting business assets is determining whether the business is considered separate or community property. A business started before the marriage may still have increased in value during the marriage due to joint efforts or investments. If marital funds or labor contributed to business growth, that portion may be subject to division.

Valuing The Business

Once it’s clear that the business—or part of it—is community property, a valuation must be performed. This process involves reviewing the company’s financial records, revenue, assets, and liabilities. Independent business valuation professionals may be brought in to provide a fair market value or use other accepted methods based on income or assets.

Options For Division

When a business is part of a divorce, there are generally a few ways to divide it:

• One spouse buys out the other’s interest in the business
• The couple agrees to sell the business and divide the proceeds
• Both spouses continue to co-own and operate the business

The choice depends on a number of factors including the business’s nature, each spouse’s role, and whether both parties are willing and able to continue working together. In most cases, courts prefer not to force ongoing business relationships between former spouses.

Keeping Business Separate

There are steps business owners can take to protect their interests before divorce is on the table. These include keeping personal and business finances separate, clearly documenting ownership and contributions, and drafting prenuptial or postnuptial agreements. These measures can help clarify who owns what and reduce disputes during a divorce.

Splitting a business can also affect employees, clients, and partners. A well-thought-out legal strategy can help preserve business operations and public perception during what is often a difficult time.

If you need help with splitting business assets during a divorce, the compassionate and skilled team at Gray Becker, P.C. is here to help. Contact us today.