Here in the Lone Star State, we take pride in going about things a bit differently. While this mentality of independence is useful in many areas, when it comes to divorce, Texas laws are more complicated than those of many other states. Specifically, Texas is among only nine states that observe community property laws in divorce, meaning that both spouses receive equal shares of their marital property. In contrast, most other states allow spouses to reach an “equitable” property division agreement, which is not always equal.
For business owners, this poses a significant threat to well-being of the business. The law classifies businesses as property that a person can own, meaning that a business owned by one spouse may end up on the negotiation table as a part of their marital property. If you own a business and see divorce in your future, you must consider your options and priorities while you build your divorce strategy.
Who owns the business?
If you and your spouse own your business together, then there is little likelihood that you can keep them from claiming their rightful portion of the business’s value. Still, you may have ways to keep the business intact on the other side of your divorce, if that is important to you. If, however, you own a business and your spouse does not, you should examine ways to separate the business from your family matters as much as possible.
The less interaction your spouse has with your business, the easier it is to demonstrate that they do not have a valid claim to its value. Make it a priority to keep your bookkeeping immaculate and keep any business funds out of your personal finances. If your spouse works in your business or helps you operate it in some way, this cannot continue. You must make it clear that your home life is separate from your business and its operations.
Can you keep the business, anyway?
Even if your spouse has a valid claim to a portion of your business’s value, this does not mean that your business is dead in the water. You may have ways to offer your spouse other assets to offset their claim, or may consider a structured payment plan to pay them their owed value over time.
These are complex issues to navigate, and each business has its own complications. Make sure to use strong legal resources and guidance to build your divorce strategy and keep your rights in Texas and your business safe during this difficult season. With careful planning and preparation, you may even use your business to land on your feet after the dust settles.