Property Division in Texas Divorces

If you’re going through a divorce and you’re a business owner, it adds a layer of complexity to an already complicated process. Owning a business is a labor of love, and including that business in the division of your marital property is never easy. Some considerations, however, can help you streamline your efforts and ensure that your business continues to thrive throughout your divorce process and into the future. 

Private Property vs. Marital Property

If you enter into a marriage as a business owner, the business is your private property. If, during your marriage, that business becomes a family business or becomes mingled with your family finances, it complicates the matter considerably. Owning a business within a marriage can happen in a variety of ways:

  • One of you owned the business when you married
  • The business owner kept the business separate throughout your marriage
  • The business owner commingled the business with your marital property during your marriage
  • One or both of you started the business during your marriage
Property division in a Houston, TX

Any of these scenarios can complicate the court’s decisions regarding the division of your marital property (if you and your divorcing spouse can’t come to terms upon which you both agree). Working closely with an experienced Houston divorce attorney is always in your best interest in a complicated divorce involving a business. 

Postnuptial Agreement

Prenuptial agreements have lost much of their historical stigma and have become far more common—especially in marriages between older, more established partners, including business owners. However, if you didn’t implement a prenup before your marriage, you might want to consider a postnuptial agreement.

If divorce is already on the horizon, such a contract isn’t an option, but if you’re married and own a business, a postnuptial agreement might be a good fit. This legal instrument isn’t an indictment of your marriage but, instead, is a mechanism for keeping each of your properties separate – and streamlining the division of marital property if your marriage does end in divorce.

Keep Your Business Separate

Suppose you bring a business into your marriage, and you want that business to remain your separate property. In that case, you must keep your business transactions separate from your family’s financial affairs. This is often easier said than done. Many business owners finance their phones, cars, and home offices through their businesses. While these may be valid business options, such financing will not help your cause if you intend to show the court that your business is your separate property. In general, separate property must be kept separate to retain that designation. 

Keep Your Records Clean

Running a business is a lot of work, and we’re all prone to cutting corners when life heats up. However, it’s important to be fastidious when keeping the books for your business. By taking the extra time necessary to keep your books clean and separate from your family’s financials, you help establish that your business is your own. 

Valuing Your Business

If you’re facing a divorce and own a business, you will need a business valuation, and this is where things can get tricky. You and your divorcing spouse can pursue a valuation together, but agreeing on the final number can become problematic. A more expensive route is to obtain your valuations. Because business valuations are a somewhat standardized practice, your results should be similar. In practice, however, valuations don’t always work out this way. Ultimately, obtaining a valuation you are both willing to sign off on can be extremely arduous.

Be Transparent

The last thing you want to do if you’re facing the division of your marital property and you own a business is an attempt to downplay the value of that business. The court does not take kindly to hiding assets in a divorce, and your first obligation is to be transparent regarding your financials. While you don’t want a valuation that overestimates your business’s worth, you do want a valuation that accurately and conservatively reflects its value. Work closely with your valuation expert to ensure the result is a fully transparent snapshot of your business financials. 

Your Business: The Emotional Component

If you own your own business, you have a strong connection to that enterprise. After all, you’ve poured your life’s blood into its creation. If you’re facing a divorce, you’re not only facing the dissolution of your marriage but also uncertainties regarding your business. The fact is that divorce is both an emotional and financial strain, and it’s going to negatively affect every part of your life, including your business. 

The emotional upheaval inherent to divorce may affect your ability to focus on your business in the way that you’re used to doing (at least in the short term). Your business will take a hit in your divorce, but focusing on moving forward with purpose and with the professional legal counsel of an experienced Houston divorce attorney will help. 

When Your Business Is a Family Business

If your business is a family business – whether it was a separate property that morphed into a family business or you began it together – it complicates the matter considerably. If you and your divorcing spouse were employed by the business, agreeing to its just and right division can be especially vexing and fraught with emotion. In the end, one of you will likely have to walk away; in such cases, careful negotiations are imperative.

If You’re a Business Owner Facing Divorce, Consult with an Experienced Houston Divorce Attorney Today.

There’s no way around it – owning a business will complicate your divorce. The dedicated legal team at The Rudisel Law Firm, P.C., in Houston, is committed to helping you every step of the way. Your business is important, and our experienced divorce attorneys have the skill, knowledge, and determination to help guide your case toward a resolution that works for you. For a free consultation, please contact or call us at 713-781-7775 today.