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

How Can I Ensure That My Spouse Does Not Gain Control or Ownership of My Business After the Divorce?

Rob Frazer | January 16, 2024

Divorce is a complex and emotionally charged experience, especially when a business is involved, and the stakes are high. An experienced and pragmatic attorney who is well-versed in the complexities of the intersection of business ownership and divorce can help you weigh your options and work with your best interests and goals in mind. With your goal of sole business ownership in mind, how can you ensure that your spouse does not take control of your business after the divorce?

Enter into a Postnuptial Agreement

Postnuptial agreements are legal contracts that outline the distribution of assets, including your business, in the event of a divorce. By clearly defining how the business will be handled in a divorce, you can minimize disputes and maintain control over your company.

Prove That the Business Is Separate Property

Texas is a community property state, meaning that most assets acquired during the marriage will be subject to division during the divorce proceedings. However, separate property is kept separate and is not divided in a divorce. Separate property is any asset you owned before marriage or received as a gift or inheritance during the marriage. If you can prove that your business qualifies as separate property, it will remain yours after a Texas divorce.

What Steps Can I Take to Distinguish My Business as Separate Property?

Get a Business Valuation

Hiring a professional appraiser who can help determine the accurate value of your business asset(s) is important because it safeguards against either party over or underestimating the value of the business. A business valuation can serve as a foundation for negotiations and ensure that a reasonable resolution is achieved and your future is secure.

Maintain Separate Finances

Mixing personal and business funds complicates property division during divorce proceedings. Maintaining clear financial boundaries during the marriage strengthens your case for keeping ownership of your business after a divorce.

Keep Detailed Business Records

Thoroughly documented business finances can be invaluable in divorce proceedings. Ensure that you have well-organized financial statements, tax records, and any relevant contracts. This documentation can help prove your ownership and minimize the chances of your spouse gaining control or ownership of the business.

Consider a Buyout Agreement

If maintaining sole ownership of the business is important to you, you might consider a buyout agreement as part of your divorce settlement. This agreement would allow you to purchase your spouse’s share of the business, ensuring that you retain full control. Negotiating a fair buyout can be a win-win solution that benefits both parties and secures the future of the business following a divorce. This is an especially important consideration for business owners who may not have a pre- or postnuptial agreement in place to define the business as separate property or for couples that had worked hard together to build a strong business.

Consult With a Knowledgeable Family Law Attorney

Navigating the complexities of divorce and business ownership in Texas requires professional guidance. The best possible support may be found in an experienced family law attorney specializing in divorces involving closely-held businesses and who understands the nuances of complex property division. At Goranson Bain Ausley, our skilled divorce attorneys provide advice specific to your unique case and advocate for your best interests throughout the divorce process, helping you to reach a settlement that keeps your business intact so that you can focus on your future. Contact us today to schedule a consultation.

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