Many married couples also happen to be business partners, running a company together and benefiting from the business equally. But what happens to the company when you and your spouse are considering divorce?
The division of property in Texas includes everything you and your spouse own together, which is known as community property. Only your community property is eligible for division during a divorce, and this may include your business.
Texas is also a community property state, which means that your assets will be divided equally between the two of you. If you and your spouse own your business together, this will likely happen.
But what if you want to keep the business? What can you do then?
Generally, there are two options:
- You keep the business together. If you and your spouse still have a friendly relationship, it may be possible to continue running your business together. This may not be possible for all divorcing couples as a contentious spousal relationship can cause a dysfunctional business partnership. Make sure to consider your feelings and relationship between you pursue this option.
- One of you keeps the business. If you have a higher stake in the company, such as you spend most of your time overseeing the day-to-day business, while your spouse only occasionally helps, you might want to keep the business yourself. Your best bet is to buy out your spouse’s share of the company. You can do this directly if you have the finances, or you can offer to give your spouse a higher percentage of your other assets to balance out the value of the business.
If these choices do not work, there is also another possibility. You can sell your business. This may be a last resort if you originally planned on keeping the business, but still a choice you should consider, particularly if you or your spouse decide during the divorce that you no longer want to continue the business. Or, if you are having trouble coming to an agreeable division. If you sell your business to a third-party buyer, you can easily split the proceeds of the purchase between you and your spouse.
Understandably, you want to hold onto your business. You’ve spent years of time and effort in developing the business and making it into what is today. If you’re not ready to give it away, you should work with your spouse to come to a peaceful solution that leaves everyone satisfied.