Texas Divorce Attorneys For Business Owners

Determining the status of your business begins with understanding the concept of community property. At the time of divorce, all property is presumed to be community. Still, that presumption can be defeated by “clear and convincing” evidence (a higher evidentiary standard used to determine whether an asset is separate property). Deciding whether the property is separate involves establishing when and how the property was acquired in this case.

The way a business is operated can affect its characterization. Strictly observing business formalities by avoiding commingling business and personal funds is critical. Likewise, is paying yourself a fair salary. The community estate can make a claim for your time, toil, and effort used in building up the value of your separate property business if you fail to adequately compensate yourself.

In a divorce, the fair market value of the business must be determined. It is the price that a hypothetical willing and able buyer would pay to a hypothetical willing and able seller when neither is under compulsion to sell or buy.

There are several ways to determine the business’s fair market value during the process of divorce. They are:

• Spouses can agree on a value, which is then listed on the community property spreadsheet.
• Spouses can search databases specific to that business’s industry to discover the selling price of similarly situated companies in the recent past.
• Parties can follow a more formal process of hiring a qualified business appraiser to value the business.

Learn more on our Business Valuation page.