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How much of your business is your spouse entitled to?

On Behalf of | Aug 23, 2021 | Divorce |

If you own a business and are going to go through a divorce, it’s important that you determine two things. The first is if the business falls into community or separate property. The second is how much your business is worth.

In Texas, any business started during a marriage is automatically community property. That means that you and your spouse own it 50/50, even if you were the only one involved in running the business. There are exceptions, such as if you found the business with separate property.

If you started the business before your marriage, it may not be divided upon divorce. However, profits made during your marriage could be divided.

If you want to preserve your business, there are a few things you can do. After finding out which portion of the business belongs to you and your spouse, you can then choose to buy them out, continue to work together or sell the business. If your spouse would like to invest further in the business, they may also offer to buy you out instead.

What counts as a contribution toward the business?

In some cases, your spouse’s contributions to the business may influence how much of the business they are entitled to, even if the business was started before you got married. In that case, you need to consider the following as contributions:

  • Marketing content created for the business (by the spouse)
  • Investments made by your spouse
  • Direct time investments
  • Taking care of the home or running the home while giving the business owner (you) time to run the business

As you can tell, there are many contributions a spouse may have made to a business, and those do need to be considered upon divorce.

How can you protect your business during a divorce?

The way you protect your business will depend on if it is marital or separate property and how much your spouse believes they are entitled to. If they have contributed little to the business and the business was created before your marriage, it may be easier to buy them out. If they contributed heavily, you may be looking at a 50/50 split or something more significant. This is something to go over with your business and divorce team.