What Happens to the Family Business During Your Texas Divorce?
Divorce Attorney Tycha Kimbrough explains the family business and divorce. Call 833-553-4251 to schedule your strategy session.
Although divorce is always fraught with challenges, owning a portion or all of a business can complicate a Texas divorce. However, with the assistance of an experienced Texas divorce lawyer, you can anticipate and plan for your divorce’s impact on your personal and professional future.
If you’re like most business owners, you have invested a significant amount of time, effort, and money into your business, so understanding the potential issues that may arise during your Texas divorce will set the foundation for making the best possible decisions. If you have not planned ahead, speak to a divorce attorney at Kimbrough Legal, PLLC, at 833-553-4251.
Because of Texas community property laws, many people assume that their spouse will get half of their business in a divorce settlement. However, this is not always the case. Why? Most business owners have taken the initiative to protect themselves by establishing business structures and agreements.
The Basics of Texas Property Division
When you go through a divorce in Texas, family court judges must first determine what is separate property and what is community property. According to Texas law, separate property pertains to what belongs to each spouse in the marriage and will remain in their possession when the marriage dissolves. Can you prove you received the property in question during the marriage solely for you and no one else? In that case, a judge might agree that it is separate property.
But what about a business?
A Texas judge can divide community property as they deem appropriate, which does not necessarily mean equally. Instead, the judge considers mitigating factors like each spouse’s earning potential and level of education. When considering a business, things get much more personal. And if both spouses play a role in the enterprise, expect complications.
Will A Texas Court Consider My Business Community Property?
Did one of the spouses establish the business during the marriage? If so, it might qualify as community property. Generally speaking, if you started your business before you got married, there’s a good chance it will be considered separate property and would not be part of any negotiations over property division. Conversely, if you established your business during the marriage, it could be deemed community property and, therefore, eligible for division. It’s best to talk to a divorce attorney to be sure.
If you fear the business could create a problem during your divorce hearings, you’ll want the assistance of an experienced divorce lawyer to help you navigate the process. Do any of the following scenarios apply to you?
- Your spouse played an essential role in running the business, including giving you the initial funds needed to launch the company, or they worked in the company as an employee.
- You established the business during your marriage.
- You invested marital money (e.g., community property or your spouse’s paycheck) into the business to help it grow.
Your spouse could make a credible claim to part of your business if so.
What is the exact portion of the business to which your spouse may be entitled? The answer depends on a few different factors. If you want to argue that your spouse should only receive a smaller portion, the best thing you can do is hire a Texas divorce attorney from the outset.
First, a valuation of your business is in order to figure out the total amount in question. If you and your spouse can work together to arrive at a settlement offer, you can avoid the hassles of going to court.
What happens if neither spouse wants to stay involved in the business? Texas law provides a few options:
- Your spouse could receive a specific percentage of the business’s income or assets when it’s valuated.
- You can opt to buy out any portion of the business owned or potentially owned by your spouse in a property division award
- You could shut down the business and liquidate assets
- You could sell the business and divide the profits equally with your spouse
- You could divide the company into two unique entities
- You could exchange other property assets for your stake in the business
Unsure what’s best for your company? Schedule a time to meet with a Texas divorce attorney about your case. A lawyer can adequately prepare you for what is to come and help you avoid common mistakes. You’ve worked hard to build your business; don’t risk losing it all because you did not seek the guidance of an experienced attorney. When dealing with property valuation, the sooner you seek help from a knowledgeable divorce lawyer when dealing with property valuation, the better.
Kimbrough Legal, PLLC: “Divorce Lawyers Near Me” in Travis County
If you live in Texas and own or partially own a business, the divorce process becomes even more complex and challenging. Are you a business owner with serious concerns about how your divorce will affect your business and financial future? If you’ve been searching for “divorce lawyers near me,” please give us a call. At Kimbrough Legal, PLLC, we can help you protect yourself, your business, your assets, your children, and your peace of mind throughout your divorce. Our dedicated, supportive legal team will guide you through every step of the divorce process, from protecting your business to settling property division to working out a parenting plan.
The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.
Kimbrough Legal, PLLC
5920 W. William Cannon Dr., Bldg 3, Ste 400
Austin, TX 78749