Your partner runs a business, and it’s supported you and your children over the years. Now that you’re getting divorced, you’re wondering if you will be able to claim a share in your partner’s business. If you want a share of your partner’s business in the divorce, it’s best to hire a family law attorney to help you work out a solution. When you speak with a lawyer, you might decide not to pursue a share in the business after all.
Boudreaux Hunter & Associates, LLC in Houston, Texas are certified in mediation, take a collaborative approach with their clients to ensure that their clients reach solutions that work for their families, and are devoted entirely to the practice of family law. We are fierce advocates for our clients and we’d be happy to assist you with your divorce. Reach out to us today for an initial consultation.
Texas is a community property state, which means that any property you and your spouse acquired during your marriage is owned by both of you. Thus, a family owned-business would go through the same two-step evaluation process like other jointly owned assets do during the divorce.
The court will look at characterization and valuation in this process. Characterization will determine if the business is community or separate property. Valuation involves bringing in a business valuation expert or accountant to determine the value of the business.
Even if you own a business and started it before you got married, it could still end up having community property components that will need to valued and divided in your divorce. This means you might have to give a share to your soon to be ex.
You and your spouse can work together and decide how to divide the business. For instance, if you have a good relationship with your spouse, you may decide to become (or stay) co-owners of the business. This is typically a tough route because it’s hard enough to own and run a business with a partner you weren’t married to. You’ll have to consider whether or not this is something you think could realistically work.
Another option you have is to sell the business and then split up the profits. This process could take a while, and you might not want to sell the business you’ve worked so hard to build.
Let’s say you’re the partner who doesn’t own the business. You may need money for your life post-divorce. Selling the business may take several months or even years. You might need to access those funds now, so this could present problems for you.
A buy-out may be the best option for you and your spouse. This is where one spouse buys out the other’s interest in the business. Both walk away with something they want and they don’t have to work together. Other assets could be thrown into the mix to reach a fair settlement. These assets could include equity in your marital home, 401(k) or IRA plan assets, or securities that are outside of qualified plans.
If you decide to sell your business – either because you need a clean break in your divorce or you simply think it’s the right decision – you will need to find an appraiser to do the valuation. Make sure you hire an appraiser with certificates like a Certified Business Appraiser (CBA) or Accredited Senior Appraiser (ASA). These certificates are hard to get, and only highly skilled appraisers are able to pass them.
You can find and hire an appraiser through the Institute of Business Appraisers (IBA) or American Society of Appraisers (ASA). You’ll likely pay between $3,000 and $12,000 for an appraisal, but it could cost more if your business is larger.
If you and your spouse are not in agreement about your divorce process, you will have a contested divorce. With this, you may obtain separate appraisals. This could be very costly, which is why it’s a good idea to hire a family law attorney to mediate and try to work out issues outside of the courtroom.
If you are the one with the business, you could be bitter about having to give up ownership or profits from it. And if you are the spouse without the business, you may believe you deserve a share.
The truth is that when you’re the spouse who primarily stays at home, running the household and looking after the children, you’re also supporting your spouse. You’re enabling them to work at their business and fulfill their career goals. Because of your effort, they can earn money. You might not be working at all, and the court doesn’t want to leave you and your children in a sticky position. That’s why the court weighs domestic duties as well when coming up with a proper settlement for you both.
You’ve worked endlessly to build your business, and you’ll do whatever you can to protect it. You don’t mind paying spousal support or child support, but your business must be off-limits.
If you have a valid prenuptial agreement that includes language protecting your business, then you can bring that up during the divorce process. Or you might have signed a postnuptial agreement after you got married. Either agreement can protect your business during the divorce process.
Additionally, make sure that you always keep your business accounts separate from your personal accounts. You’ll also need documents to show that your business is separate property. For example, maybe you have a document showing your grandparents gifted you the business a long time ago. This may work in your favor.
Whether you own a business or you want a share in your partner’s business, a family law attorney can help. They will help you decide the best path to take and what assets to pursue. You can have as amicable a divorce as possible and be on your way to a brighter future with your family ahead.
If you need assistance with a divorce in Houston, TX, you can reach out to Boudreaux Hunter & Associates, LLC for help. We’ll be your source of support in your time of need. Make sure you get in touch online or by calling us at (713) 333-4430. We look forward to working with you.
Attorney Shannon Boudreaux at Boudreaux Hunter & Associates, LLC in Houston, TX offers the extensive experience and supportive guidance clients need to get through their divorce or other family matter as favorably as possible.
Kevin and his team handled the entire process exactly how we discussed during the consultation. I wanted to move quickly, and his team made it happen. Additionally, they were very responsible with my retainer, and did what they said they…
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