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TX divorce lawyerEven individuals who take great care when identifying, categorizing, and appraising assets during the divorce process, can overlook things that could impact their financial well-being down the road. This is especially common in cases where couples own particularly unique or valuable assets, such as a business interest, so if you fall under this category, it is important to consult with an experienced high asset divorce lawyer who can ensure that your interests are protected.

Protecting Your Business

Under Texas law, property and assets obtained by a couple before marriage are not considered marital property and so are not subject to division upon divorce. While this legal practice can be used as a form of protecting one’s assets, it should not be the only source of protection for those who own a business interest. This is largely due to the fact that even if a business was created before a person’s marriage, it could still be impacted by divorce, especially if the company is successful and growing and the other spouse had a hand in the business’s increased value. In these cases, the non-owner spouse could be awarded a portion of the increase, or appreciation, in value, which could be a considerable amount if the business owner was just starting out at the time of the marriage, and the business has since become successful.

Active Appreciation

The term active appreciation is used to describe any increase in value resulting from the actual effort of an individual, usually the business owner, to improve a company. When the parties involved in the business are married, but later decide to get divorced, the court could require the individuals to divide the increase in value, but only if the non-owner spouse helped improve the business through:

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TX divorce lawyerDissolving a marriage is complicated and often has the potential of becoming an emotional and difficult process. Those risks tend to be especially high for those who are involved in a high asset divorce and own unique assets, such as a business, as they could be required to sell the company, or buy out their soon to be ex-spouse’s interest, both of which could cause significant financial strain. Obtaining an accurate business valuation is critical to ensuring that any property settlement entered into by a couple is fair, so if you or your spouse own a business and are considering divorce, it is critical to speak with an experienced high asset divorce attorney who can ensure that your assets are properly appraised.

Determining a Company’s Value

Hiring an expert in business appraisals is critical when it comes to placing a value on a company. This type of appraisal is complicated, as it requires a prediction of the potential future value of the company, as well as its past and current value. During this analysis, business appraisers will take a number of factors into account, including the company’s:

  • Expenses;
  • Earning history;
  • Earning capacity;
  • Dividend-paying capacity; and
  • Stock prices.

Depending on the method of valuation used, an appraiser may also be required to evaluate the price of company equipment and other tangible assets, such as:

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Texas divorce lawyerOwning a business with a spouse is a relatively common practice, and while many of these types of businesses are successful and lucrative, they can also raise a host of complicated issues in the event of a divorce. This is because couples who own companies together must grapple with dividing the business if they later decide to dissolve their marriage, which can be difficult if both parties wish to retain an active role in management or there is disagreement regarding the value of the company itself. For help addressing the fate of your own company after divorce, please contact a member of our high asset divorce legal team for advice.

The Importance of Business Appraisals

The first step in these types of cases is to determine the value of the business in question, as this will affect how and whether the company should be divided between the spouses. Like any other asset, there are professionals who specialize in appraising businesses. These individuals assist divorcing couples who own a business together by determining the fair market value of the company, which refers to the amount that a buyer would be willing to pay for a business from a seller who wants to sell but is under no necessity to do so.

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Texas family lawyerMost people don’t enter into marriage with the expectation that they will later get divorced. Similarly, couples who start businesses together usually do not anticipate running into any obstacles regarding ownership and control. The reality, however, is that many couples who are also business owners will face complicated issues in the event of a divorce, so if you and your spouse are contemplating divorce and you both share an interest in a family business, we strongly encourage you to speak with an experienced high asset divorce attorney who can explain your legal options.

Retaining Co-ownership

Once a couple who owns a family business decides to get a divorce, they must start addressing the future of the company. For some couples, retaining co-ownership is a good option, especially for those who are deeply committed to their enterprise. However, it can be difficult to maintain a close working relationship with an ex-spouse, although many business owners are able to do so through careful scheduling and focusing only on the business aspects of their relationship.

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Texas divorce lawyerAlthough most people associate divorce with child custody issues, alimony, or deciding who will keep the marital home, many couples who jointly own a family business must also divide the company itself. This requires an in-depth valuation of the business, as well as a determination of whether the company is actually jointly owned. Furthermore, once a couple’s business interests have been appraised and the parties have agreed to a settlement, the business’s actual division will need to take place, which can be difficult, especially for couples with an acrimonious relationship. For help determining the value of your own business and coming to a settlement agreement with your spouse, please contact one of our experienced high asset divorce attorneys today.

Initial Considerations

Before deciding on how to divide a business during divorce proceedings, the couple in question must consider a variety of factors, including:

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