How Is a Business Divided in a Texas Divorce?

Divorce finances can be complex, especially if the couple has amassed significant assets and property. It can become even more complicated if one or both of the spouses own a business since this, too, can be considered a marital asset that must be divided. How does the court divide a business under Texas community property laws? If this is your situation, a Texas divorce attorney can help ensure you receive your fair share of the marital estate.

Is the Business Marital Property?

The first thing that needs to be addressed is determining whether or not the business actually is marital property. If the business opened before the couple married, the court may determine that any increase in value or assets that took place during the marriage could be considered part of the marital estate and subject to division. If the business opened during the marriage, then it is very likely that it will qualify as marital property.

One major exception to either of the above is if the couple signed a prenuptial or postnuptial agreement that specifically stated that the business was not part of the marital estate and would be protected from division should the couple divorce.

What Is the Value of the Business?

Once it has been determined that the business is marital property, the next step is determining its value. Generally, both parties will hire their own business valuation experts to come up with the financial worth of the company.

There are three different methods that may be used:

• Income approach – This approach uses the anticipated cash flow and/or future profits to determine a business’s current value.

• Market approach – The market approach calculates the value of the business based on the sales of similar businesses within the same time frame and geographical area.

• Asset approach – This approach is often used if neither of the above methods is able to determine the value of the business, the company owns substantial assets, or is struggling to make a profit.

What Happens to the Business?

Once the parties have agreed on (or the court has declared) the value of the business, the couple will have to decide how that value will be divided in half. If one spouse wants to retain ownership of the company, they may need to purchase the other spouse’s share, either through a “cash” transaction or by giving up their equal share of other assets.

If neither spouse wishes to maintain ownership, they could sell the business and split the proceeds.

Contact a Decatur, TX Divorce Lawyer for Legal Help

If you have decided to end your marriage and either you or your spouse own a business, make sure you have a skilled Fort Worth, TX divorce attorney protecting your financial interests. Call J.A. Griffin Law Firm, P.C. at 817-926-6153 to schedule a free and confidential consultation.