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How Are Business Assets Divided in a High Net-Worth Divorce?

Nov 1, 2021 | Divorce, Property Division

Divorce is a challenging process no matter the situation, but it can be even more daunting if there is a business involved. Whether you and your spouse have been running it together or one party was more involved than the other, dividing up business assets can be a challenge during a high net worth divorce in Houston, TX. However, a great attorney can help you out and make sure both parties get a fair outcome.

There are several important considerations, such as what the assets are and who was more involved with the business. What’s more, it’s important to figure out if one of you already owned the business going into the marriage or if it was all built up jointly. The best solution is often to have everything valued, so you know how much it is worth and whether one party could buy the other one out.

Dividing Your Business Assets in a High Net Worth Divorce in Houston, TX

Although it might take some negotiating, there is always a way to split up a business or keep it going in a way that suits both parties. You might be able to negotiate with your spouse or even run the company jointly if you’re going through an amicable divorce. This is usually the easiest and least painful way to go, and it can allow the business to keep going, thus preserving the income you and your spouse have built up over the years.

If not, one party might need to buy the other one out, and the court will decide who gets what assets. Although this can be a more stressful process, it can ensure that you get a fair deal for the work you’ve put into your business. It’s also important to keep in mind that any assets purchased or investments made before your marriage are yours, as they are not included in community property.

Important Considerations

Before knowing where you stand, you’ll need to consider all aspects of your business and how it has been run. In particular, you should think about whether you’d like things to remain similar or whether you’d like a radical change, such as selling the company and moving on to a new venture. Ask yourself if you or your spouse would like to keep the business and what level of income is necessary to sustain your and their life.

If one of you was more involved or ran the company on their own, then the situation is clear-cut, and that person will keep the business. However, they might have to pay the other spouse, especially if they have been relying on the income from the company so far. If both were part of the company, you could either keep running it jointly, one person could buy the other one out, or you could sell it and divide up the proceeds.

Separate or Community?

A key consideration is whether either one of you brought a part or all of the assets with you into the marriage. The situation is easier if you started the business together after your wedding because this means that everything is community property and should be distributed equally. Depending on the situation, this might mean 50-50, but this isn’t always the case. The court will try to be fair to both parties and make an arrangement that works for everyone.

Any investment you made in your business before you were married will be yours to keep. However, this can be hard to measure over time, especially if you’ve been married for a long time. Your spouse might dispute that the property is separate, in which case you’ll need to fight for your rights. A lawyer can analyze your situation and figure out which parts of your business are community property and which ones are separate.

How to Value the Business

Those who decide to either transfer ownership of the business to one person or sell it and divide up the proceeds will need to get a professional valuation. Different appraisers might come to different conclusions based on factors such as the value of the business if it were sold on the open market and the various assets available. Intellectual property will also need to be considered, and this is less tangible than some of the other components.

Some businesses are heavily dependent on one person, who might have unique skills or a great reputation among clients. This could further complicate the matter because your company might not be worth very much without the cooperation of one or both spouses. Your lawyer can help you consider how you can best approach such a situation.

Joint Ownership

For couples who are going through an amicable high net worth divorce in Houston, TX, joint ownership could be a great option. This allows both you and your spouse to keep on running the business, even after you have split up in your personal life. If you’ve always worked well and are willing to continue with this setup, then joint ownership could be the easiest solution.

However, keep in mind that this is only possible if both parties want it. Otherwise, it is likely to lead to further complications and problems in the long run. The Texas family court is keen to avoid this, so they will only award joint ownership to spouses who have expressed a desire to explore this option.

Large Businesses and Corporations

The rules and regulations are different for very large businesses or corporations, which often involve a lot of other people at a high level. A corporation that has stock can be awarded to one party, while some of the stock is sold to pay out the other spouse. A business valuation will be crucial to figuring out exactly how to split such a large company, and the court might have to help in determining a fair outcome.

Hire a Competent Divorce Attorney

No matter the size or nature of the business in question, hiring a highly experienced divorce attorney is always a good idea. They can help you come to a fair agreement and figure out which type of split makes the most sense. If you and your spouse are going through an amicable divorce, your lawyer might suggest mediation or collaboration, but if there are disputes, they will advise you to go to court. Either way, they will help you get the best outcome.

Splitting up a business during a high net worth divorce in Houston, TX can be a big challenge, but your divorce attorney can help. They will discuss all the relevant details with you and help you figure out whether your business is separate or community property. What’s more, they will suggest a professional valuation and then encourage you to explore alternative options such as joint ownership.

You’ll be able to find a suitable solution together with your lawyer, whether your business is small or large. Get in touch with us now at Skillern Firm to find out more and book an initial consultation with one of our top experts. We will analyze your situation and then let you know what you can expect. With our years of experience in the field of divorce, we have all the tools you need to get the best outcome.

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