You and your spouse will, no doubt, have a very different idea of what is fair and reasonable in a divorce as you start to disentangle your lives. If you have spent most of your adult life building up a business, you may not take kindly to the implication that your ex is somehow entitled to some of the value of that business. This is likely to be especially true if your ex isn’t actively involved in the operations of the business and wasn’t involved in its initial formation.
However, just because you started the business doesn’t mean that your ex doesn’t have any kind of claim to it. Many different considerations will impact what the courts do with your business in a Texas divorce. What you invested in the business, when you started the company and many other factors will influence how community property laws impact your business.
Will the courts consider the business community property?
The most important factor in how the courts will approach your business during the divorce is whether your business is community property jointly owned by you and your spouse or your sole and separate property. Separate property is typically exempt from division in most divorces, which means you won’t have to worry about splitting your business if it is separate property.
If you owned the business outright prior to marriage, it may be your separate property. If you inherited the business from a family member, this may also mean that it is your separate property. However, if you started the business during your marriage or invested income acquired during the marriage into the business, it may be marital property and not your separate property.
How much of the business could your ex get in the divorce?
Many people imagine that asset division involves a 50-50 split of each particular asset. However, that is not necessarily how the Texas courts will handle community property assets in a divorce. Family law judges have some degree of discretion regarding how they handle asset division and each individual asset.
They can choose to allocate assets to certain spouses or to divide them. In the case of a business, they could give your spouse a share or even order alimony in the amount of a percentage of your earnings from that business for a specific amount of time.
It is almost impossible to predict how a judge will handle a business in a divorce unless you have a solid argument for it being separate property or an ironclad prenuptial agreement. If you find yourself worrying about what will happen to your business in a divorce, you may want to sit down with a Texas family law attorney to start strategizing.