For entrepreneurs, building a business takes years of hard work, investment, and personal sacrifice. But when divorce enters the picture, many business owners are surprised to discover that their company could be considered a marital asset—and therefore subject to division. Understanding the complex relationship between business owners and divorce is key to protecting what you’ve built.
Whether your business is large or small, was started during the marriage, or has grown significantly since then, the outcome of your divorce can have a major impact on your financial future. At Albin Oldner Law Group, our experienced Frisco divorce attorneys help business owners develop strategies to preserve their assets, minimize disputes, and move forward with confidence.
Is your business considered marital property?
The first question in any business-related divorce is whether the business is marital property or separate property. In community property states like Texas, assets acquired or developed during the marriage—regardless of whose name is on the title—are typically presumed to be shared.
Even if you started the business before the marriage, its increased value or any contributions made by your divorcing spouse (financial or otherwise) may make part or all of it subject to division. For example, if marital funds were used for business growth, or your spouse contributed time or labor, the court may classify a portion as a marital interest.
The importance of business valuation
Before dividing or negotiating a share of the business, a proper business valuation must be completed. This process determines the fair market value of the company by examining:
- Physical and intangible assets
- Revenue and profits
- Client lists, trademarks, and goodwill
- Market trends and future earning potential
Accurate valuation is essential not only for equitable division but also for ensuring that spousal support and other settlements are based on a complete financial picture.
Legal tools for protecting your business
Business owners can reduce risk and uncertainty with proactive legal planning. Some tools include:
- Prenuptial agreements: A prenuptial agreement can designate your business as separate property, clearly stating that your spouse will not have a claim to it in the event of divorce.
- Postnuptial agreements: If no prenup was signed, a postnuptial agreement can serve a similar purpose, provided both parties agree to its terms after marriage.
Strategies for division in equitable distribution states
Although Texas is a community property state, the courts strive for a “just and right” division, not necessarily a 50/50 split. Other states follow equitable distribution principles, meaning judges may consider:
- The role each spouse played in the business
- The length of the marriage
- The financial situation of both parties
- Future earning potential and personal contributions
Depending on these factors, the court may award the business owner full ownership while compensating the other spouse with cash, property, or other assets.
Common options for dividing a business
When the court determines a business is marital property, there are a few ways it may be addressed:
- Buyout: One spouse purchases the other’s share based on the appraised value
- Offset: One party retains the business while the other receives other marital property of equal value
- Sell and divide: The business is sold, and the proceeds are split
- Co-ownership: Rare but possible, especially if both spouses want to remain involved
Each option comes with pros and cons, and the best choice depends on your goals, financial health, and the nature of the business.
What to do if you’re facing divorce as a business owner
If you’re a business owner going through divorce, here are key steps to protect your interests:
- Gather all business-related financial records
- Avoid commingling business and personal funds
- Work with a qualified family law attorney and financial experts
- Consider early negotiation and settlement strategies
- Document your spouse’s involvement (or lack thereof) in the business
Taking these steps early can make a significant difference in your outcome and reduce the emotional and financial toll.
Get legal support tailored to business owners
Divorce is always challenging, but for entrepreneurs, it can be especially high-stakes. From business valuation to negotiating a fair division of marital assets, you deserve a legal team that understands the intricacies of protecting your livelihood.
Call Albin Oldner Law Group at (214) 423-5100 to speak with a knowledgeable attorney about safeguarding your business during divorce.
