What to Consider When Divorcing a Business Partner
Starting your own business can be rewarding both financially and personally. If you start a business with your spouse, it can provide you with more freedom and result in a partnership in more ways than one. However, what happens if you and your spouse/business partner decide to get divorced?
Texas is a community property state, so the law requires divorcing couples to divide community property, fairly and equitably. This may translate to an equal division, but an equal 50-50 division is not guaranteed. Community property is the property and assets that spouses acquired during the marriage. Business value and interests gained during your marriage will certainly be community property, and it will need to be divided in accordance with the law.
How do you divide a business that is the livelihood for both spouses? First, you should always seek help from an experienced family law attorney in cases like these. Divorce cases involving businesses can be particularly complex, especially if the business means a lot to both of you. An attorney can help you explore your options for what happens to your business.
Selling and Dividing the Profits
One option is to sell the company at market value and divide the profits 50/50. This is common when one spouse does not want to continue running the business on their own.
One Spouse Keeps the Business
If one spouse does want to keep running the company, they might be able to buy out the ownership interests of their business partner. If the spouse has the capital available, they can simply pay the other for their share, and the other spouse can use the funds to start a new venture.
However, in many cases, the spouse who will keep the business does not have the liquid capital to buy out the other. There are other options to compensate the spouse who is leaving the company, however. For example, if half the business is worth $250,000 and your house is also worth about $250,000, one spouse might keep the business, and the other might keep the house.
Another common issue arises when both spouses want to be the one who continues operating the company. This can lead to a serious dispute and possible delays in the divorce process. If the spouses cannot agree through negotiation or mediation, the court will likely order them to sell the company and divide the profits.
Keep Working Together
Some divorces are relatively civil, and the spouses can cooperate and get along moving forward. Many divorced people continue to raise children together, so it is possible for certain couples to continue to operate a business together. This is a possibility that should be carefully considered, as it can be a disaster if you later learn you cannot work together anymore.
Contact a Fort Worth Divorce Attorney for Assistance with Complex Cases
Divorce cases involving businesses are challenging, and the Law Office of Kyle Whitaker handles cases with complicated circumstances like these. Please do not hesitate to contact us online or call 817-332-7703 if you think divorce might be in your future.