There can be many complicating factors in a divorce. You might have a high-net-worth estate with assets that are challenging to divide in accordance with state law, or you might have a difficult child custody issue that needs to be resolved through negotiations or litigation.
If you own a business, you add another level of complexity to your case.
And if you mishandle the issues facing you, then you could put yourself at a financial disadvantage for years to come.
To avoid that from happening to you, you need to be aware of some of the key issues that face Texas business owners when they go through a divorce. We hope that this post will provide you with information that you can use as you move forward with your marriage dissolution.
Key considerations in a divorce involving a business
You have a lot on your plate with the divorce process itself. Throw your business in the mix and you might find yourself overwhelmed. But by educating yourself about the process, you might be able to alleviate your concerns and develop a divorce strategy that’s right for you. Here’s what you need to consider:
- Classification: A lot of people go into marriage already owning their own businesses. In those instances, the business might be considered individually held property that is exempt from the property division process. That said, there are a lot of times when individually owned businesses become marital property based on the actions of the parties. For example, if your spouse ends up working for your business and developing new clientele, then they’re going to take an interest in the business. Newly acquired business assets are likely to be considered marital property, too. How is your business and its assets going to be classified?
- Valuation methods: If your business is to be divided in some fashion, or if you’re going to buy out your spouse, you need to have a realistic understanding of your business’s value. That’s easier said than done, especially given that there are different ways to appraise your business. Some look at the fair market value of the business’s assets, while others turn to projected earnings to evaluate how much a business is worth. Each of these approaches can lead to different results, which is why you need to make sure that you choose a business valuation method that’s advantageous to you.
- Ownership issues: Depending on the structure of the business in question, the division of even a part of the business can affect ownership. This can make things more complicated, as you might then have to turn to partner buyout provisions and other legal arrangements to figure out how to divide the assets in question.
- What’s most important to you: Although marital assets are to be divided in a just and equitable fashion, splitting your business in half might not be your best option. Therefore, if you really want to keep the business and not deal with your spouse’s disruptions, then you might simply give up more of the other marital assets that are in play to retain your business in full. On the other hand, if you’re done with the business, then maybe you just want to sell it and split the profits with your spouse or use it as a bartering tool to get more of the remaining marital estate for yourself.
Work to secure the outcome that’s best for you
There are a lot of different ways to approach your divorce. But you have to choose the right one if you want to maximize your chances of securing the outcome that best positions you for the future. With that in mind, take your time to truly learn your options and what each one can do for you.