If you are a business owner, your company is likely your most valuable asset. A divorce can cause a lot of uncertainty about what will happen to the enterprise you poured so much time, money and energy into.
Take these steps to help you determine what will happen to your business in a divorce and figure out what your ideal options are.
Understand community vs separate property
In Texas, if you and your spouse cannot come to an agreement yourselves, the courts will split any community property equitably. Community property, or marital assets, refers to items and investments that you and your spouse received after your marriage began. Assets that you obtained prior to your nuptials typically fall under the category of separate property.
This means that if you started your business before getting married, the business is likely separate property. However, there may be some complicating factors. Your spouse may have a claim on a portion of the business if he or she contributed significantly to it or if the business rose in value after the marriage began.
Prioritize your preferred outcome
If your business is community property, there are two common ways to divide this asset. One spouse can retain ownership and compensate the other, or you can sell the business and split the proceeds. Decide which of these is your ideal scenario so you can determine where you might need to make compromises the secure this outcome.
Figuring out what will happen to your company in the divorce is only the first step. Next, you must obtain a valuation of the business, a process that is usually highly complex. Remember to do your due diligence and seek an independent valuation to help ensure you get the outcome you are looking for.