In Texas, assets are divided equitably during a divorce, as it’s a community property state. This often leaves divorcing spouses with a lot of questions about how their assets are going to be divided. Both personal and business assets are taken into account by the judge when you’re going through a divorce. Your divorce lawyer in Houston, TX can help you determine how your assets are likely going to be split.
Ask a Divorce Lawyer in Houston, TX: How Are Business Assets Divided in a Texas Divorce?
Consulting a divorce attorney in Sugar Land, TX about your business assets during your divorce is wise. This is because there are no set laws that determine how business assets are typically divided up during a divorce. There are several circumstances that can impact the division of these assets.
Two Situations That Influence How the Business Assets Are Divided During the Divorce
1. You and Your Spouse Have a Joint Business
If you and your spouse opened the business together during your marriage, then you most likely did so using joint funds. This makes your business community property. This means that your business is owned equally and will be split equally between you during the divorce.
One party may wish to give up their half of the business during divorce proceedings, as it will understandably be difficult to work with your ex-spouse. It’s within your right to do this. However, it is never necessary to give up your half.
2. The Court Feels It Would Be Fair to Award Your Ex-Spouse Part of the Business
If you are a business owner and you open this business with your own money before the marriage, then it is not community property. However, the court may still decide to award your spouse part of the business. This may happen if your spouse has considerably fewer assets than you do during the divorce. Your spouse may also be awarded part of the business if they contributed to its running while you were married.
Your spouse won’t always be awarded part of your business, and it always depends on the circumstances of your specific situation. Your spouse will only get part of the business of its deemed equitable, a.k.a. fair, when deciding your assets.
How Can I Ensure My Former Spouse Doesn’t Get Part of My Business in the Divorce?
It may be difficult to ensure your spouse isn’t awarded a percentage of your business during your divorce. However, there are certain things you may have done during your marriage that will minimize the chances that your spouse is awarded part of your business.
1. Check Your Prenuptial or Postnuptial Agreement
If you specified that your spouse is not entitled to any part of your business in a prenuptial or postnuptial agreement, then your business is safe. However, this must have been done before you and your spouse began divorce proceedings. Plus, your spouse must have agreed to forfeit any claim to your business before they signed the agreement.
Make sure you read your agreement carefully during your divorce to see whether or not you made any specifications regarding your business. If you didn’t make any specifications, then your prenuptial or postnuptial agreement can’t help you protect your business in the divorce.
2. Prove Your Spouse Made No Contributions to Your Business
If you started a business on your own during your marriage, then it won’t always be considered community property. However, the judge may be more likely to award your former spouse a share of your business if they contributed to its growth in any way.
Did your spouse help with marketing? Did they financially contribute to the household more than usual while you were waiting to turn a profit? If so, then there’s a good chance your spouse may be awarded part of your business. If you can call upon witnesses to testify that your spouse had no hand whatsoever in your business’s growth or success, then it may help you keep full control of your business during the divorce.
3. Show You Paid Yourself a Good Salary
Let your attorney and the judge know how much you paid yourself out of your business’s profits. If you didn’t award yourself a good salary, then this can influence whether or not your business is deemed a separate or marital property during the divorce.
The marital estate could have a claim on finances, time, and effort you put into the business if you didn’t pay yourself fairly for it. However, this matter is often complicated and highly specific to your divorce case.
Can I Object to the Judge’s Decision?
You can appeal a divorce decision within 30 days in Texas, but there’s never a guarantee that the judge will accept your appeal. Your attorney can advise on whether or not appealing the decision would be beneficial for you.
There are certain circumstances where your spouse can be awarded a percentage of your business during your divorce. Always work with an experienced lawyer when dealing with business assets, as it’s a highly complex topic.