How Is a Business Divided in a Texas Divorce?
When one or both spouses own a business, divorce becomes significantly more complex.
Texas is a community property state, which affects how business assets are handled.
Here’s what you need to know.
⭐ 1. Determine Whether the Business Is Community or Separate Property
✔ Separate Property
- Owned before marriage
- Inherited
- Received as a gift
✔ Community Property
- Created during marriage
- Grown using marital funds
- Increased in value due to either spouse’s efforts
A business can also be part separate, part community, requiring valuation.
⭐ 2. Business Valuation
Courts look at:
- Assets and liabilities
- Cash flow
- Goodwill
- Market value
- Owner compensation
- Growth potential
Experts are often needed to assign a fair value.
⭐ 3. Ways a Business Can Be Divided
⭐ A. One Spouse Keeps the Business
The most common outcome.
The other spouse receives:
- Cash buyout
- Property offset
- Unequal division of other assets
⭐ B. Sell the Business and Split Proceeds
Rare unless both spouses agree.
⭐ C. Joint Ownership After Divorce
Almost never recommended due to conflict potential.
⭐ 4. Reimbursement & Economic Contribution
If one spouse invested:
- Separate money
- Labor
- Sweat equity
…the community estate may be owed reimbursement.
⭐ 5. Protecting a Business During Divorce
It’s critical to:
- Maintain clean financial records
- Avoid commingling personal and business funds
- Document all capital contributions
- Keep valuation documents organized
⭐ Do You Own a Business and Face Divorce?
Business division cases require skilled legal strategy.
Our office handles complex property division, including small businesses, LLCs, partnerships, and professional practices.
