This blog posts discusses divorce and property division where a business is involved in a Texas Divorce. Divorce can be complicated. After the issue of child custody arrangements, the division of marital property usually tops the list of complications. A family business can make an already complicated process that much more difficult. A family business is often a symbol of all the hard work and commitment you have put into both your family and your career, and walking away can be especially painful. If you are facing a divorce and you own a family business, you need an experienced Houston divorce attorney.
What is Martial Property in Texas?
In Texas, the property you acquire during your marriage is generally considered marital property. Marital property is divided between you and your divorcing spouse in a way that the court deems “just and right.” (See Texas Family Code 7.001). Suffice to say, however, that the court’s determination of what is just and right may be odds with your ideas of how to divide your property. Coming to terms with the outcome can be especially difficult. Unless you and your spouse are able to hammer out an agreement related to your business, the court will make the determination for you.
Read this blog post to learn more about “Property and Debt Division in Texas: What you should Know.
How Do I Value the Family Business in a Texas Divorce?
It is difficult to come to an equitable division of a family business in a divorce if you do not have an accurate valuation of that business. The thing about business valuations, however, is that they can vary widely. While reputable business valuators should ultimately come to similar values, there is plenty of room for your spouse to bolster the business’s value or to minimize the business’s value – depending upon his or her motivations. In other words, obtaining one business valuation that accurately reflects your business’s value and that both of you can agree upon can be a challenge. If you own a business chances are you have substantial assets. For a more detailed discussion, check out our article “High Asset Divorce in Texas, What you Need to Know“.
Businesses are Sometimes More than Monetary Value
When your divorce involves a business, it is essential to recognize that the business likely has more than just monetary value. If you are involved in running the business, it is probably a labor of love that can be difficult to monetize. Further, the business provides you with a career and a means of supporting your family. This is something that a check written for an amount that equals roughly half the business’s value simply cannot do. If you are facing a divorce that involves a family business, there is a lot to consider.
Options for Dividing a Family Business in a Texas Divorce
If your business is a going concern that provides for your family, you have options when it comes to your divorce:
• You can continue running the business as business partners who are not married. If you ran the business together as a married couple, you still have the requisite experience, skill, and commitment to doing so that you had before you were divorced. However, if your divorce is plagued by acrimony – which nearly any divorce can devolve into – this path forward is unlikely to be successful.
• You can sell the business and split the proceeds. While this is often the cleanest approach, it has its own inherent difficulties. The proceeds from such a sale can vary widely due to a fluctuating market and to your ability to find the right buyer at the right time. Ultimately, selling for the sole purpose of divorce can be a financial setback.
• One of you can buy the other’s interest in the business. This option makes a lot of sense because it provides the business with continuity of ownership, it guarantees that the business will continue to be competently managed, and it bypasses the need to worry about the market and to find the right buyer right now.
The difficulty with this option is that it can be very hard to walk away from a business that you have worked so hard to manage and grow. Additionally, if your business continues on the successful path that you have helped set it on, your ex-spouse is likely to reap greater rewards (than you may have been compensated for) by selling in a strong market to the right buyer, which could take years but could also happen soon after the divorce.
When it comes to divorce and your family business, there are so many angles to consider that it is nearly impossible to formulate a “right” answer. Instead, a dedicated divorce attorney will help you see the big picture, will help you determine what options are likely to work best for you and your children, and will help you move forward with purpose – knowing that you have made informed decisions in your pursuit of life after divorce.
The Family Business and Mediation
If your divorce does proceed to court, the judge will determine how the division of your family business will be handled, and this is generally not in your best interests. If you and your divorcing spouse – with the guidance of your respective attorneys – cannot come to an agreement that is somewhat mutually satisfactory, formal mediation can help. The neutral mediator in the process will help both of you better understand exactly what your options are and what will likely happen if you take the matter to court. Hammering out a decision together that helps preserve the integrity of the business you built together can be an important step forward in the divorce process in Texas.
Divorce being what it is, however, mediation does not always accomplish its intended results. Your experienced Houston divorce attorney will work closely with you throughout the process and will help you keep your eyes trained for what is best for you and your children – whether that means continuing with the mediation process or proceeding to court.
Read this blog post for more information on mediation: “Houston Divorce Mediation and why it is better than Trial“
If You Are Facing a Divorce that Involves a Family Business, You Need an Experienced Houston Divorce Attorney
Few things complicate a divorce more than a family business, but experienced legal counsel will help you find a solution that works for you. The dedicated legal professionals at The Rudisel Law Firm, P.C., have the experience and fortitude to fight for your case’s best possible resolution. We care about your case, and we are here to help, so please fill out an online evaluation or call us at 713-781-7775 today.
Please read the articles below for more valuable information on the process of divorce in Texas.