Austin Business Divorce Lawyers
Business owners going through a divorce must consider how the dissolution of their marriage will affect their business. They must consider the future of the business as well as their investment in such assets as products, equipment, online presence, and real estate. Determining the division of business assets upon dissolution of your marriage can be complicated, depending on the company bylaws and the state of the divorcing couple’s relationship.
If you have a financial interest in a business and you have decided to divorce, an experienced divorce attorney with Minton, Bassett, Flores & Carsey, P.C. can help you take appropriate steps regarding your business. Whether you plan to hold onto your business, sell it, or divide your shares, we can offer trusted legal guidance to protect your interests.
Contact Minton, Bassett, Flores & Carsey, P.C. at (512) 476-4873 today for a consultation with an Austin business divorce attorney about your potential impact on a business you and your spouse own. If you have a financial interest in a business that matters to you, speak to a divorce attorney who understands business and is prepared to fight for you.
Why Hire a Lawyer When a Business is Involved?
Texas is a community property state. This means that all assets acquired during the marriage must be divided equitably between you and your spouse as part of your divorce. If your business interest was acquired during your marriage with joint funds, it will almost certainly be considered marital property that must be divided.
In some circumstances, your spouse may claim part ownership of a business you started and ran on your own. They could force you to sell it and split the proceeds or insist that you buy their piece of the business at an exorbitant price. Without an attorney to protect your interests, the ex-spouse who had nothing to do with the business you built could become a vocal participant in your company going forward.
If the prospects of losing your business or paying for the privilege of continuing to own it do not appeal to you, you need a lawyer who is ready to protect you and your rights.
Why Choose Minton, Bassett, Flores & Carsey, P.C. For a Business Divorce?
At Minton, Bassett, Flores & Carsey, P.C., in addition to our dedicated lawyers’ nearly six decades of experience guiding parties through complicated divorces, we are experienced business litigation attorneys. It is rare to be represented by a divorce attorney who has also successfully represented clients involved in a wide range of business litigation in state and federal courts in Texas.
Our Austin divorce attorneys can help you protect your financial interests in a divorce, including pursuing the financial compensation or civil remedy you desire for the disposition of a business you own.
We prefer to help the parties to a divorce negotiate an agreeable resolution to the disposition of a business that is part of the divorce. But if your divorce is contested and the status of your business remains in dispute, you’ll benefit from the experience of an aggressive Austin civil litigation attorney from Minton, Bassett, Flores & Carsey, P.C.
What Makes a Business Community Property in a Texas Divorce?
In Texas, community property must be divided equitably between the parties to a divorce. Community property is any property that was acquired during the marriage.
Separate property is any property acquired before marriage and items such as inheritances and personal injury awards that are held separately. A family business handed down to you during your marriage that your spouse never worked for or participated in should be considered your separate property.
If there is a dispute, the court assumes all of a couple’s assets to be community property. A challenge requires clear and convincing evidence to defeat the presumption, such as legal documentation establishing when and how the business was acquired separately from the marriage.
Community property can include any separate property that became commingled with community property during the marriage.
Commingled property is often an issue when the status of a business is considered in a divorce. If one spouse contributed to the improvement or maintenance of separate property owned by the other partner, this may be considered a commingling of ownership. In business, a spouse or another party who has informally contributed to the business to the point of appreciable value may have “sweat equity” in the business. In a divorce, the party whose family owned the business might have to offer something to satisfy the other party’s informally earned interest in the business.
Further, if you worked in your family business but never paid yourself, your spouse could claim a right to be compensated for the time and effort you took away from your marriage to apply to your business instead.
Common Ways to Split a Business in a Divorce
In most divorces in which one or both parties own a business that is ruled to be community property, there are four options:
- One spouse buys out the other’s interest in the business.
- The couple sells the business to a third party and splits the proceeds.
- The business is dismantled, and its assets and debts are divided as part of the equitable division of marital assets.
- The business remains intact, and the divorced parties become co-owners.
Assuming the divorcing couple has not reached an agreement about how to dispose of the business, the spouses would, in most cases, work with a third party, such as a mediator, and their respective attorneys to decide how the business or its assets will be equitably divided between them.
The division of assets becomes part of the couple’s marital agreement, which is eventually part of the divorce settlement approved by a judge. In a high-asset divorce, there may be several possibilities to trade for a party’s minority interest in a business and keep it intact or to arrange a buyout.
If the parties cannot come to an agreement, it will be up to the court to determine ownership of the business and, if it is community property, assign it a value and distribute it in a way that is “just and fair” to each party. In court, each spouse’s attorney would have the opportunity to make their client’s case to the judge.
What’s a Business Worth in a Texas Divorce?
Except for cases of co-ownership, the first task in disposing of a business in a divorce is to determine the business’s value. Very broadly, the two most common ways to measure the value of a business are:
- The book value. This takes into account the assets and liabilities as they are listed in the company’s annual and quarterly reports, with appropriate adjustments for depreciation or appreciation.
- The market and earnings. This is a look at what an outside buyer would pay for the business based on the business’s income and the value of its assets over the past five years and a projection as to what the business should do over the next five years.
We typically hire an independent consultant we regularly work with to examine the books and physical assets of a client’s business, make comparisons within the market, and consider other factors to come up with a valuation. We then present a figure as part of property division negotiations. The legal team representing our client’s estranged spouse will have done its own valuation and come up with a value, and we will work to negotiate a final figure.
Keep Your Business Safe During a Marriage Breakup
If you have built a business on your own or will inherit a family business, you can take steps to protect it in case of a divorce. You might speak to your Minton, Bassett, Flores & Carsey, P.C. business litigation lawyer about:
- A prenuptial or postnuptial agreement. This contract would say the business and all of its assets and liabilities will always be considered your separate property.
- A limited liability corporation (LLC). As a legal entity standing on its own, the LLC would take on all of the business’s liability. In a divorce, you would retain control of a sole proprietorship or your partnership in a larger LLC, and your estranged spouse would have no grounds for a claim against the LLC.
- Business bylaws. You can adopt rules that designate rights to a business in the event of a divorce or that establish a buy-sell agreement and an agreed-upon business valuation methodology. If there are multiple partners in the business, bylaws could establish rules that require a divorcing partner to sell their share of the business to the other partners. Business partners may also be required to obtain sole rights prenuptial agreements or postnuptial agreements.
Get in Touch With Our Attorneys Near You During This Process
The end of your marriage could also be the end of your business if you do not have reliable legal guidance. A divorce attorney for business owners with Minton, Bassett, Flores & Carsey, P.C. can help you determine the best disposition for a business at the center of your divorce and ensure that your rights are upheld. Our attorneys have advocated for the rights of Texans and Texas company owners for more than 50 years.