Splitting the Most Complicated Asset for Texas Spouses
Deciding which spouse gets the house or boat is complicated enough during a divorce. Splitting the family business, however, is on another level.
On the surface, a family business is an asset. During a Texas divorce, assets owned by either spouse must be classified as either marital/community or separate. Separate property is anything obtained by either spouse prior to the marriage, and marital/community property is almost anything obtained by either spouse during the marriage. Texas is a community property state, meaning both spouses are assumed to own marital property equally (50/50). This doesn’t mean, however, that marital property in a Texas divorce will be equally divided.
One complication with family businesses is that the business may be a mixture of separate and marital property. For instance, the spouse who started the business might have done so prior to the marriage and built it into an asset worth $300,000. During the course of the marriage, the other spouse might have contributed sweat equity and helped the business reach a valuation of $500,000.
In this example, $200,000 of the $500,000 would likely be classified as marital/community property. Splitting the business, then, might be more quite complicated.
Methods of Splitting the Business
Unless both spouses agree to continue operating the business together after the divorce, which is extremely rare, the couple must agree on the best method of splitting the business. Ways to do this include:
- Giving the business to one spouse (often in exchange for other assets);
- Selling one spouse’s ownership interests (to the other spouse or a third party); or
- Selling the entire business and appropriately splitting the proceeds.
Contact a Knowledgeable Texas Attorney For Help Splitting Complex Assets
In addition to the complexity involved in splitting a family business, many spouses are also emotionally attached to the business. After spending years toiling away at your company to make the operation profitable, we understand that you want—and deserve—a fair share as part of the final divorce decree. If you’re in need of legal advice, contact Tycha Kimbrough at Kimbrough Legal, PLLC today.
