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Is your business subject to property division in a divorce?

On Behalf of | Apr 8, 2022 | Divorce |

If you or your spouse own a business, your divorce becomes even more complex. Essentially, your business is part of the divorce’s property and asset division assessment.

Understanding how the courts evaluate your business as a marital asset can help you anticipate possible outcomes.

Is your business considered marital property?

One of the primary considerations is whether your business is marital property or separate property. It could be a marital asset even if your spouse is not your business partner or you started the business before the marriage. For example, this may be the case if your spouse contributed labor to the business, you used marital funds to support the business or if the business experienced growth following marriage. Additionally, living in a community property state such as Texas can affect the court’s division of your business as marital property.

Prenuptial or postnuptial agreements can outline the division of your business or even define the business as separate property. The court considers these kinds of signed contracts as part of its assessment of your business.

Do you want to divide the business?

If your spouse is a partner in your business, there are other options outside of property division. These options include:

  • Buying out your spouse’s share from the company
  • Selling your company and dividing the profits
  • Co-owning your business as you had before

The least common choice is continuing to co-own and operate your business after a divorce. However, you and your spouse can explore each option with each other and your legal teams.

Your business’ division or redistribution in a divorce can affect your tax status. Therefore, it is vital to consider the laws of your state and your individual situation if you are a business owner getting divorced.