You built the business. What happens to it in divorce?

If you are going through a divorce in Texas and you own a business – or your spouse does – that business could become one of the most contested assets. Divorce courts won’t just look at who started it or whose name appears on the paperwork. They’ll ask how the business is classified, how much it’s worth and how it factors into the division. 

Here’s what you need to understand if you are trying to protect what you’ve built or preserve your fair share in a business during a high net worth divorce.

Not all business interests are treated the same under Texas law

Texas applies community property rules, but that doesn’t always lead to a clean 50/50 split, especially with business ownership in the mix. If you started the business before marriage, you might have grounds to claim it as separate property. But if the business grew during the marriage, or if either of you invested marital time or money into it, the court may count a portion of it as community property. Even when the business carries your name alone, your spouse could still have a claim tied to how it developed.

You need to value the business before dividing it

You can’t divide something until you know what it’s worth. Business interests don’t come with a simple price tag, especially when you are dealing with private ownership, fluctuating income or hard-to-track assets. A forensic accountant or valuation expert will usually review financial statements, tax filings and operations to produce a formal valuation. That number becomes the baseline for deciding whether you’ll keep the business, negotiate a buyout or offset it with other property in the estate.

The valuation method can change the outcome entirely

Different valuation methods can lead to very different results. An income approach looks at earnings and projections, while an asset-based model counts tangible items like inventory and real estate. A market-based method compares similar businesses that recently sold. Depending on how your business operates and what you want from the divorce, some methods may offer more favorable outcomes than others. That’s why your legal and financial team needs to choose the right strategy from the start.

You have more than one option for dividing a business

Selling the business outright rarely makes sense, especially if it remains your main source of income. Many business owners negotiate buyouts – trading cash, property or retirement assets to keep the business intact. If your spouse built the business and you are entitled to a share, you can still receive compensation without staying involved in day-to-day operations. In high-asset divorces, division usually happens through strategic offsets, not through splitting the business in two.

What happens next depends on what you’re willing to fight for

You don’t need to walk away from what you built, but you do need a clear picture of how the law treats it, what it’s worth and how to approach the negotiation. When you know what your business is worth and how it fits into the bigger picture, you can approach the next step with purpose – not guesswork.

Vernier & Associates, PLLC

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