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What Happens to a Small Business in a Texas Divorce?

 Posted on May 11, 2022 in Division of Assets

TX divorce lawyerSmall businesses often do so much more than provide a family’s income. They also represent countless hours of labor, sleepless nights, and years of personal investment in a project that may not always have been guaranteed to be successful. If you own a small business in Texas and are facing the prospect of divorce, you probably have questions about what will happen to your business in the property division process.

Is My Spouse a Co-Owner in My Business?

Even if your spouse’s name is not on the business’s documents, if you did not protect your business with a prenuptial or postnuptial agreement, your spouse likely owns at least part of the business. Any business growth since your marriage, including income, asset ownership, or even goodwill, is probably community property and will be subject to division in a divorce.

Does a Divorce Mean My Business is Over?

Many couples have successfully navigated the issue of small business ownership in a divorce in a way that allows the business to continue and thrive. There are several ways to do this, but the three most common are:

  • Co-ownership - Spouses can continue to own and operate the business together after the divorce. Spouses who get along well are likely to be more successful in this endeavor, but even in the best of circumstances, co-ownership is no guarantee that the business will succeed in the long term. It is also important to note that community property will still need to be divided.
  • Sell the business - If a business is sold, dividing the profits becomes a relatively straightforward process and spouses can sever their financial ties permanently once the divorce is finalized. However, one or both spouses may be understandably reluctant to sell the business or the business may be difficult to sell, which means this option may not be available to every couple.
  • Buying out ownership - If one spouse has the assets and an interest in doing so, he or she can “buy out” the other spouse’s business ownership with other individual or community assets. For example, if a spouse owns half of the equity in the marital home and that amount is sufficient to buy out the other spouse’s portion of business ownership, this may be a satisfactory solution for both parties.

Talk to an Experienced Dallas, TX Property Division Lawyer

If you own a small business and are facing a divorce in Texas, you know how important it is to protect your rights and business interests in the property division process. For help managing this crucial task, meet with a Dallas divorce attorney with Clark Law Group. We fight passionately to represent our clients’ rights and we would love the chance to show you what we can do for you. Call us to schedule your initial consultation today at 469-906-2266.



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