As a business owner, you’ve poured your heart and soul into building your company from the ground up. During divorce, you might worry about whether you can retain business ownership. Although Texas community property laws could entitle your spouse to a portion of your business, the final decision depends on several factors.
Is your business separate or community property?
When you establish your business during marriage, courts generally consider it community property. One exception is if you have specific legal protections in place, like a prenuptial or postnuptial agreement.
If you started your business before marriage, it likely qualifies as separate property. However, any increase in value during marriage might belong to both spouses.
Ways to divide your business
Figuring out how to split a business during a divorce can feel overwhelming. The best option depends on your unique situation, especially your finances and relationship with your spouse. Your options include:
- Buyout: You could buy your spouse’s share with cash or other assets.
- Structured settlement: Pay your spouse their share gradually over time.
- Business sale: Consider selling the whole business and splitting the money.
- Asset trade: Trade or give up other marital assets in exchange for your spouse’s share.
- Co-ownership: You could run or own the business with your spouse.
Co-ownership is good if you don’t have the means to buy your spouse’s share of the business. However, if your goal is to remain the sole owner, you’ll want to negotiate a buyout or asset trade.
Getting the numbers right
When it comes to dividing your business, getting an accurate valuation is key. This means having a professional take a close look at the various elements, like:
- Company assets
- Revenue streams
- Market position
They’ll also factor in things like goodwill and income-earning potential. The thorough evaluation helps ensure no one gets an unfair advantage during the division.
Protecting your business legacy
Even though Texas community property laws can affect your business ownership, you still have options to maintain control. It’s a smart move to work with a divorce attorney experienced in handling business divisions. They can help you develop strategies to keep your business running smoothly and to maintain fair and favorable negotiations for you as the owner.