Will My Texas Business Suffer Because of My Divorce?

 Posted on October 24, 2024 in Complex Property Litigation

Couples usually find that divorce affects many different aspects of their lives. There are the more common issues people are familiar with, like splitting custody or moving out of your home, along with some less expected issues, including when one or both spouses own a business that needs to be divided. 

Will spouses continue working together after the marriage ends? Will their business relationship need to change? Is this handled differently for small mom-and-pop shops than it might be for a large corporation? For these and other questions, speak with a knowledgeable Austin, TX asset division attorney. 

What Happens with Businesses in a Texas Divorce?

Since Texas is one of the few states that still follows a Community Property model for dividing assets in a divorce, any business owned by either or both spouses will usually be split down the middle, all else being equal. However, there are additional factors taken into consideration beyond the value of the business alone. The following are situations that can make an equal division complicated:

• One spouse owned a business before the couple got married, but its value increased significantly during the marriage. In that situation, the value of the business before the couple got married is likely considered separate property and not subject to division, and the difference between what the business used to be worth and what it is currently worth would be community property, subject to an equal division between both spouses.

• One spouse works for the business and does not take a salary, but the income from the business supports family expenses. 

• One spouse ran the business and the other was a stay-at-home parent, handling all the household and childcare responsibilities. This arrangement allowed the first spouse to focus all his or her energy on the business’s success while the second spouse had no opportunity to build up his or her individual finances. This is given weight during decisions about a division of assets.

How Do You Calculate the Value of a Business?

It can be difficult to calculate how much a business is worth, especially because income, debt, salaries, liabilities, assets, business size, and future earning capacity all need to be considered. Sometimes, a spouse who owns a business might try to hide details about it or inflate their expenses so the other spouse is not awarded their fair share. 

Whenever a business needs to be divided in a divorce, it is recommended to use an accountant who specializes in business valuation and who can access all the information related to the business and its financial situation, ensuring that each spouse walks away with what he or she deserves.

Contact an Austin, TX Divorce Lawyer for Business Owners

If you or your spouse owns a business, speak with an experienced Travis County, TX asset division attorney about how it will be divided in your divorce. At Powers Kerr & Rashidi, PLLC, we know that these issues can be a source of stress and uncertainty and we are dedicated to giving you all the information you need to ensure that your rights are always being protected. Call us at 512-610-6199 to schedule a private consultation and hear more about how we will advocate for you to get your fair share of your marital estate.