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How Are Business Assets Divided in a Texas Divorce?

When a couple gets divorced in Texas, the law says that marital property--called community property here--should be split between the spouses "in a manner that the court deems just and right." What is "just and right," however, may not be an equal split.

Matters tend to become even more complicated when the divorce involves complex assets such as a business. Here let's go over some points to consider when a business is part of community property.

A comprehensive business valuation should take into account business assets and debts, the value of the company's reputation, and how well the business is expected to perform in the future.

If you or your spouse started a business after you got married, then the total value of the business is subject to division at divorce. You would be well advised to work with a property division lawyer with experience in complex business valuations.

Depending on your situation, your options may include buying out your spouse's share in the company, selling your share, continuing to own the business together, or selling the business to split the proceeds.

In some cases, part of the value of a business can be categorized as separate property, and separate property does not have to be divided at divorce.

If the business existed prior to the marriage, then you have a few more points to consider. What was the value of the business on your marriage date? What was the value when the divorce petition was filed? How much did the business appreciate in value over the course of the marriage?

Unless a nuptial agreement states otherwise, the appreciation in value is regarded as community property, while the value of the business on the marriage date is considered separate property. The spouse who owned the business before the marriage can therefore keep that separate property value.

At Nix | Poet, we understand the importance of a comprehensive and accurate business valuation when a business owner divorces. Your divorce settlement will have an impact on your financial life for years to come, so don't hesitate to work with a divorce attorney with the knowledge and negotiating skills to reach a settlement that protects your future.

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