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Divorce and business ownership

On Behalf of | Oct 14, 2021 | Family Law |

Divorce can be a tough process to navigate because there are so many assets to value, balance against each other, and divide. Determining which assets are marital, when they became marital, and what they are worth can be contentious. In Texas, one spouse might own a business, which makes the process even more complicated.

Dividing a business in divorce

The first step is to come up with a value for the business. This is likely to require the services of a business appraiser, because the spouses are not likely to agree on the valuation. There are variations on how this can play out. For example, sometimes one spouse owns the business, and sometimes the spouses are both owners or high-level employees of the business. This can affect whether the best outcome is for the business to stay with one spouse and for them to pay the other alimony, or if they should retain some form of joint ownership in it.

Appraisers can choose different approaches to valuation as well. For example, there are different ways to determine both the value of the business itself for asset division and the future income that the business generates for spousal support purposes. In family court, it becomes controversial if the non-owning spouse benefits both from asset division and from income support from the business, especially if the asset division process affects the operations of the business.

All of these considerations make divorce with business ownership complex, but it is important to get it right for fairness and to avoid negative outcomes, like a big tax hit or a disruption in the performance of the business.