If you and your spouse own a family business, your divorce will have an impact on that business. Texas is a community property state. Therefore, if it is a business you own together, it will have to be divided in a way that both you and your spouse will receive half of it.
What are the Options for Dividing the Family Business?
There are several options for you and your spouse when you decide to divide the family business.
If the business has several partners, one spouse can sell their community portion of the business to someone else. The divorcing parties can the split the community funds from the sale.
A spouse can buy the other’s community portion of the business. Keep in mind that the business will continue generating income in the future after the divorce is final. You and your spouse will have to decide how to deal with future earnings and what your pre-divorce contributions to the business contributed to its future success.
You can choose to dissolve the business and sell it altogether and decide how to divide the funds.
You can decide to keep the business and continue to co-own it. A decision to co-own the business takes some real finesse on the part of both spouses to work with each other after the divorce. There would need to be clear roles, boundaries, etc. to remain business partners after the divorce is final. You would also likely need to clearly restructure the business formation.
You need to also consider taxes and what type of division makes the most sense tax-wise.
Get Guidance from a Texas Divorce Professional
Dividing a family-owned business can be complicated. If your spouse owned the business prior to your marriage, a portion of the value of the business will be your spouse’s separate property. You may need to have a forensic accountant trace funds to see how much of the value is your spouse’s separate property.
There are numerous other legal considerations that may arise. It is complicated and sometimes a sensitive subject for both spouses.
For more information in general, or to discuss in more detail what impact your divorce will have on your family business, call or contact Martinez Legal, P.C. where you will find lawyering with heart.