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Who gets the business in a divorce in Texas?

Who gets the business in a divorce in Texas?

On Behalf of | Apr 4, 2024 | Property Division |

Divorce proceedings can be complex, especially when it comes to dividing assets such as a business.

In Texas, the division of property follows a set of rules that determine who gets what.

Community property vs. separate property

According to the CDC, the divorce rate in Texas is 1.4 per 1,000 couples. The state follows the principle of community property when it comes to dividing assets acquired during the marriage. Most assets that either spouse acquired during the marriage belong to both of them equally. The court considers assets acquired before the marriage as separate property.

Characterization of the business

In a divorce, it is important to determine whether a business is community property or separate property. If one of the spouses started or acquired the business during the marriage using community funds, it is generally considered community property and subject to division. On the other hand, if a spouse established the business before the marriage or used separate funds, the court may consider it separate property.

Equitable division

While Texas law presumes that the court should divide community property equally between spouses, it may consider other factors to determine a fair division. These factors may include the earning capacity of each spouse, their financial contributions to the marriage and any fault in the breakup.

Buyout or sale

In cases where one spouse wishes to retain ownership of the business, they may offer to buy out the other spouse’s share. Buyout negotiation can be a part of the divorce settlement. The couple may choose to sell the business and divide the proceeds.

Protecting your interests

Whether you are a business owner or the spouse of a business owner facing divorce, you need to understand your rights and options regarding the division of assets. Seeking guidance from a qualified professional, such as a financial advisor or mediator, can help you ensure the protection of your interests.

Divorce is never easy and a fair division of assets should be the goal of both spouses.