Run a Business With Your Spouse? What to Know About the Divorce Process

Getting a divorce is never easy. Spouses invariably have a lot of financial, logistical, and emotional issues that need to be addressed. Divorce is even more challenging for business owners–especially those who run a company with their spouse. It is imperative that you protect yourself and your business. In this article, our Fort Worth divorce attorney explains the key considerations if you and your spouse run a business and you are preparing for a separation in Texas.

Legal Background: A Jointly Run Business is Likely Community Property

For business owners going through a divorce in Texas, one of the first things that they need to do is to figure out whether the company is community property or separate property. Under Texas law (Tex. Fam. Code § 3.002), community property is most assets that are “acquired by either spouse during marriage.” A business that was founded by one spouse prior to the marriage but that relied on marital assets and/or gained significant value during the course of the marriage may also be deemed community property. In Texas, community property is owned 50/50 by the spouses. Though there are exceptions, a business that is run together during a marriage is likely to be deemed community property.

You and Your Spouse Have a Lot of Control (Continue to Run the Business, Sell It, Etc.)

What happens to a business when the owners/partners get divorced? The answer depends entirely on the specific circumstances—including the goals of the business owners and their ability to work together. Indeed, you and your spouse have a lot of control over what will happen to the future of your business. Your three basic options are as follows:

• The former spouses can continue to run the business together as partners. If you and your former spouse have a good working relationship, there is no legal reason why you cannot continue to collectively own and operate a business after a divorce.
• One spouse can buy out the other. In many cases where business owners get divorced, one spouse buys the other out as part of the divorce settlement. This way, there can be a clean break from the financial relationship without damaging the business. 
• The divorcing couple can sell the business. It may not make sense to continue to own a business together. It may also not make sense for either spouse to run the company alone. In this circumstance, the parties can sell the business and split the proceeds.

Contact Our Fort Worth Divorce Attorney for Immediate Help

At The Law Office of Kyle Whitaker, our Texas divorce lawyer has the legal skills and real-world expertise that you can count on. If you and your spouse own and operate a business and you are getting divorced, we can help. Contact us today for a confidential case assessment. From our office in Fort Worth, we provide divorce representation throughout all of North Texas.