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Stocks, bonds and business assets in a Texas divorce

Last week we wrote about the unfortunate possibility that some spouses might try to hide assets from a divorce settlement. The best thing to do, as we said, is to be aware of how assets are categorized and which assets you are entitled to. So let's discuss other types of assets (or debts) that should be accounted for in the division of marital property in Texas.

Property division can become especially complicated for business owners and their spouses. In Texas, community property is the term for assets and debts that are subject to division in a divorce, and depending on a few factors, a business owned by one or both spouses will be regarded as community property.

One way for a person to keep a business out of possible divorce negotiations is to create a prenuptial agreement that says the business will remain separate property. But without such a prenup, the business, even if it was started before the marriage, could be divided, at least in part, if the business provided income during the course of the marriage.

If a business was started after a couple got married, then it could also be subject to division, even if the one of the spouses was a stay-at-home parent and didn't otherwise work. A court will likely look at the stay-at-home parent as having put his or her career aside to care for the children, and thus the stay-at-home parent could receive a portion of the business assets.

In many cases, it may be a good idea to negotiate and trade other assets for business assets. To ensure the best outcome, divorcing spouses will need an accurate valuation of marital property, including the business and other investments such as stocks and bonds.

Source: The New York Times, "From a Prominent Divorce in Affluent Class, Lessons for All," Paul Sullivan, Aug. 9, 2013

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