With the dissolution of a marriage, it is customary to divide marital assets and shared property between former spouses. In divorce cases involving business owners, the process of dividing assets can be more complicated than a standard divorce. Because a business is legally considered property, divorce raises several questions about how the business will proceed from that point on. These questions may include whether the business is to be considered separate or marital property, which spouse is able to continue ownership of the business, and the future of the business itself. This matter becomes even more complex if both spouses are feuding, as an uncooperative divorce can lead to work responsibility disputes and other factors that directly affect business ownership rights in a pending divorce.
Divorces where a business is implicated can have the potential to raise conflict. A business is a piece of your livelihood, and divorce puts the financial security that you have worked hard to build at risk. At Kirker Davis LLP, our Austin divorce lawyers often handle high asset divorces involving family businesses, private practices, restaurants, and other ventures. We have ample knowledge in the most efficient way to handle these cases and have helped business owners throughout Central Texas navigate through their divorce.
Texas law mandates that property acquired during a marriage is subject to equitable division at divorce. As community property, both spouses are entitled to a “just and right” share of marital assets. As separate property, each spouse walks away with their own assets acquired before marriage, or through gift or inheritance. Regarding a business, laws concerning separate and community property become hazy. If a business was purchased before marriage or through separate property funds, it is separate property and owned by one spouse. However, many separate property businesses have community property interests that may derive from:
These interests need to be accounted for and may give a spouse half ownership of a business, even though it is separate property. Determining whether a business is separate or community property relies on the date of marriage, the date the business was founded, the funds used to purchase the business, and the contributions of each spouse to the business during the marriage.
The future of a business may rely on whether you are willing to transition to a professional relationship with your ex-spouse. Some former spouses continue their business relationship as co-owners, but this is not a feasible option for many. Options to consider during a pending divorce that implicates a business include:
In divorce cases where the business will be sold, you will likely need a professional business appraiser to assess the value. In the event of a buyout, the skills of an appraiser will also be necessary to determine the value of your former spouse’s share.
Addressing the issues that arise from a divorce between business owners can be vexing, especially if it is a contested divorce. At Kirker Davis LLP, our divorce law attorneys can help you navigate through the complex landscape of divorces involving businesses. We can help you assess the value of your business, determine who is entitled to which shares, and help you decide the future of your business. If you are going through a divorce and need knowledgeable guidance, contact our Austin offices at (512) 598-0010 for a free consultation.