What Happens To Your Business Assets in a Houston Divorce

Divorce can be a challenging time. It becomes even more difficult when dividing business assets. If you’re a business owner going through a divorce, you might wonder how to split assets in a divorce in Houston while protecting what you’ve worked hard to build.

In Texas, there are several steps you can take to protect your business during a divorce. From knowing how Texas law works to exploring legal options like prenuptial or postnuptial agreements, understanding your rights can make a big difference. In this article, we’ll explain the basics of dividing assets in a divorce.

Quick Summary:

• Divorce can be stressful, especially when it involves business assets. Understanding the laws and considering legal options can help protect your business. Texas law treats community property, acquired during marriage, as shared. Separate property, owned before marriage or acquired separately, generally remains with the original owner. Knowing these differences is important when dividing assets in a divorce.
• Texas law mandates that business assets acquired during the marriage be split equally between spouses. To navigate this process, start by getting a business valuation and gathering financial records. You might face options such as selling the business and dividing the proceeds, having one spouse buy out the other’s share, or continuing joint ownership if both parties can work together. These options can help you protect your financial future and manage your business assets effectively.
• To protect your business assets during a divorce, start by creating a prenuptial or postnuptial agreement that outlines how your business will be handled, ensuring it remains separate property and specifying your control over it. Keeping your business and personal finances separate can be beneficial to clearly show that the business is not part of community property. Additionally, maintain detailed records of all business transactions and finances to prove ownership and value. These steps can help safeguard your business and ensure a smoother division process.

What Is the Difference Between Community Property and Separate Property in Texas?

When dividing property in a divorce, it’s important to understand the difference between community property and separate property. This will determine how your assets will be divided if you go through a divorce.

Community Property

Community property includes everything you and your spouse have earned or bought together during your marriage. Texas law treats these items as shared property. This means things like your cars, house, and bank accounts are usually divided equally if you get divorced.

Separate Property

Separate property is anything that you owned before you got married. This also includes gifts or inheritances given only to one spouse. The property you bought with money you earned before you got married is also considered separate property. Generally, the separate property stays with the person who owns it.

How Are Business Assets Divided in a Houston Divorce?

When a couple goes through a divorce in Houston, dividing business assets can be one of the most complicated tasks. Learning how to split assets in a divorce in Houston can help you prepare for this process and protect your financial future.

Here’s a guide to help you understand the process:

• Know the Rules: It is important to familiarize yourself with how Texas law deals with business assets in a divorce. Under the Texas Family Code, anything you and your spouse earned or bought together during the marriage is shared equally. This includes business assets if they were acquired during the marriage.
• Get a Business Valuation: To divide your business assets equally, you need to know their value. You need to assess your business so you understand how much it’s worth. This helps you figure out a fair way to split it.
• Gather Financial Records: Collect all important financial documents related to your business. This includes bank statements, tax returns, and any other records that show how the business has been doing. These documents can help in dividing the business fairly.
• Sell the Business and Divide the Proceeds: The court may require the business to be sold, with the proceeds split between the spouses. While this ensures a straightforward division, it’s not usually the preferred option. Selling the business means losing control, and for many, it’s a main source of income. This is why most business owners try to avoid this option.
• Buy-Out Option: In this situation, one spouse buys the other spouse’s share of the business. This allows one party to maintain ownership and control, while the other receives fair compensation for their share. It’s a common choice, especially when one spouse wants to continue running the business.
• Joint Ownership: In some cases, the court may allow both spouses to continue owning and running the business together after the divorce. This option works best if both parties have a good working relationship and can collaborate effectively.

What are the Strategies for Protecting My Business Assets During Divorce?

If you’re going through a divorce and own a business, it’s important to take steps to protect your business assets. Here are some common ways to help keep your business safe:

Prenuptial Agreements

A prenuptial or premarital agreement outlines how your business assets and property should be divided during divorce. In this contract, you can clearly state that your business will remain a separate property. You may also specify that you want to have full control and ownership over your business after a divorce.

Prenuptial agreements must be signed voluntarily by both parties involved. Each party is required to fully disclose their finances and the agreements must be fair at the time of execution.

Postnuptial Agreements

If you weren’t able to set up a prenuptial agreement before your marriage, you might want to consider a postnuptial or post marital agreement. It is almost similar to a prenuptial agreement, except that it is created after marriage, rather than before. Under postnuptial agreement, both parties have the same rights and responsibilities.

Keep Business and Personal Finances Separate

It would be beneficial to keep your business finances separate from your personal finances. This makes it clearer that the business is not part of the community property. This can help in showing what is truly yours.

Proper Record Keeping

Another strategy for protecting your business assets is to keep accurate records. Good record-keeping can help you prove your ownership of the business and the value of your assets. Keeping clear records of business transactions, finances, and ownership can make it easier to protect your business during a divorce.

Call Our Houston TX Family Law Attorneys Now!

It’s not easy to divide business assets during a divorce, but knowing how to do it can be helpful. Understanding how to split assets in a divorce in Houston involves several steps, from valuing your business to negotiating a fair division. During this difficult time, our Houston divorce attorney can help you ensure that you handle the division of business assets properly.

At The Alsandor Law Firm PC, we can help you navigate complex family law matters, and ensure that your best interests are protected during a divorce. We can help you understand the rules and explore the available options. Whether you need advice on legal documents, help with negotiations or representation in court, our family law firm is ready to support you. We aim to make the process clearer and less stressful, so you can focus on moving forward.

When your business is at risk during a divorce, every decision matters. Contact us now for a free consultation or schedule a paid strategy session, and take the first step toward protecting your business and your assets.