In Texas, a business started during a marriage using joint funds is considered community property. As such, its assets are subject to division in the event of a divorce. In cases where a business was funded and started by one spouse before a marriage took place, the matter becomes more complicated. Even though the business was started with separate funds, if it was expanded with joint funds or appreciated in value due to the help of the other spouses, how assets are divided involves a number of considerations. Even in cases where only one spouse runs a business started with separate funds, the court may decide a marital interests exists, apportioning some of a closely held business’ assets to a non-owner spouse.
If both spouses contributed assets or work to a business, the court will consider other issues such as the financial contribution of each spouse, whether it was operated primarily by one spouse or equally by both, and who is legally authorized to contractually bind the business. If you are the primary business operator, even if you have to divide your business assets, at least you won’t have to dissolve your business and start over.
If you and your spouse can continue working together in your business, you may not need to worry about dividing certain assets, dissolving your business, or selling a portion of it. However, if you cannot agree to work together or your spouse wants out of the business, your options involve the following:
In regard to the last option, you could allow your spouse to keep the family home or any money you have in joint savings accounts or investments. Of course, if you expect your business to grow in value, this will have to be taken into account when determining how to offset its value with any property you can lay claim to from your marriage.
Your spouse may agree to be bought out from his or her interest in your business. Here, it’s important to determine what your articles of incorporation and company bylaws state since others may have a legitimate legal interest in what happens. If you or your spouse elects the buyout option, there shouldn’t be any tax consequences as a result.
Evaluating a business is a complicated and involved process. Regardless of what you and your spouse ultimately decide, it’s important to have an accurate business valuation in relation to the division of your marital property. When evaluating businesses, there is a market, asset, and income approach that must be properly executed. At the Law Office of Dennis A. Fuller, we understand the issues involved and how to ensure our client’s financial and legal interests are protected. For more information, contact Dallas, Texas divorce attorney Dennis A. Fuller today to learn how we can help you.
The Law Office of Dennis Fuller is located in Dallas, Texas. Mr. Fuller provides quality family law representation to his clients in all areas of North Texas, including Dallas, Fort Worth, Denton, McKinney, Frisco, Richardson, Addison, Plano, and throughout Dallas, Collin, Denton, and Tarrant Counties. To speak with Dennis Fuller about your legal concerns, contact us at 972-852-8500 to schedule an appointment today.