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Are your business assets marital property?

On Behalf of | Apr 6, 2020 | Firm News |

It can be difficult for anyone to achieve dreams in life. Certain obstacles are unavoidable, and sometimes, things are just not meant to work out. You were able to reach your career goals by becoming an entrepreneur and creating a company that took off and remained successful. However, your marriage was not meant to last.

Now, you have concerns about what will happen to your business as a result of your pending divorce. Will you lose everything? Will your soon-to-be ex-spouse end up with the business? Will you owe him or her business assets? These are understandable concerns because your business undoubtedly means a great deal to you, and you do not want to unnecessarily harm its future.

Is your business marital property?

First, you may want to determine whether the court will consider your business marital property. If you first got married and then started your business, it does constitute marital property. Additionally, any assets obtained by the business after your marriage fall into this category. The same goes for starting your business before the marriage. The business itself may be separate property, but assets earned after marriage are not. Because Texas is a community property state, you and your spouse have the right to a 50-50 split of marital assets.

The possibility also exists that your spouse could have a claim to the business because he or she contributed to its success. At first, you may think that this does not apply because your spouse did not have dealings with the business, but if your spouse managed the household, taking over those duties may have allowed you to put more time and effort into the success of the business, which means he or she indirectly contributed to the company.

What can you do?

Before you resign yourself to losing a portion of your company during your divorce proceedings, you may want to remember that nothing is set in stone yet. You may have the ability to negotiate with your spouse to determine whether he or she would give up any claim to the business or business assets in exchange for other property. 

These negotiations can be tricky and sometimes heated, so it may be in your best interests to discuss your options with an attorney. Your legal counsel can help you determine the best options for working toward your goals.