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Specialty tag(s): Divorce for Business Owners, Divorce

Is a Business Considered Community or Separate Property in a Divorce?

Angel J. Berbarie | March 5, 2024

When you begin the process of getting a divorce in Texas, your business will be presumed to be community property, meaning that it will become part of the pool of assets that need to be divided with your spouse. However, if you can prove that the business should be considered separate property, you may be awarded full ownership of your business.

What Is Considered to Be Separate Property?

Separate property is property that you owned before you got married or property that was given to only you, either as a gift or an inheritance.

How Do You Prove That a Business Is Separate Property?

It’s not enough to say that your business is separate property. You need clear documentation, such as business formation documents or tax filings, showing one of three things:

• You created the business before you got married.
• You were given the business as a gift or inheritance.
• You started the business while you were married using money that was separate property, and the finances of the business have remained separate from marital property since that time.

You may need to call on a financial expert who can trace and document the origin of the money that was used to start your business to prove that it should indeed be considered separate property. You’ll also need to demonstrate that the business never became community property. Over the course of a marriage, it’s very easy for community property to become commingled with the finances of your business. This can make it much harder to prove that the business should be considered separate property later on.

Getting a divorce when you own a business adds a layer of complexity to the process, but with the help of an experienced divorce attorney, you can minimize the negative effects of divorce on your business and plan for a solid financial future. Call the highly respected family law attorneys at Goranson Bain Ausley and let us assist you with your case today.