Divorce: Protecting Your Small Business

man and woman facing away from each other
If you own a small business and are in the process of a divorce, it makes the situation much more complicated. Your business is likely a labor of love that you have poured your blood, sweat, and tears into – in addition to being a valuable asset – which makes the prospect of losing part or all of it in a divorce especially painful. Better understanding how the division of marital assets works in the State of Texas may help you better protect your small business. (click here to read more about family businesses and divorce)

Marital Property or Separate Property

If you began your business during the course of your marriage, it is almost certainly a marital asset that will need to be divided between the two of you in a manner that is deemed fair (or equitable). Alternatively, your spouse will need to receive his or her fair share of the business’s value, and determining a mutually acceptable value for the business can be a challenge in and of itself. If you owned the business prior to marrying and you kept it strictly separate throughout, your business could be a separate property that will remain yours post-divorce. (read more about the difference between marital and separate property)¬†Further, if you addressed separate ownership of your business in a valid legal contract, such as in a prenuptial or postnuptial agreement, the separate nature of your small business may also be protected. Factors that can affect the separate quality of your business include:

  • Any increase in value is likely to be considered a marital asset.

  • The mingling of business and family finances can blur the line between marital and separate property.

  • Failure to pay yourself for running the business can decrease your family’s financial status and tip the balance from separate to marital property.

  • Investing family funds in your business’s growth can point away from the business’s separate nature.

Your Small Business

The court understands that businesses tend to retain far greater value when they are allowed to remain whole in the division of marital property. In fact, much of your business’s value is likely to come from the steady income it provides. As such, the court is very likely to work with you regarding your intention to keep your small business intact. Toward this end, any one of the following options may come into play:

  • You may be able to buy your spouse’s ownership out over time

  • You may be able to take out a loan and purchase your spouse’s ownership outright

  • You may be able to offset your spouse’s ownership with other assets.

Worried that your spouse will get half of your business? Click here to learn more. 

Turn to an Experienced Killeen Divorce Attorney for the Legal Guidance You Need

Few things complicate a divorce more than business ownership. If you are facing a divorce and are concerned about protecting your small business, Brett Pritchard at The Law Office of Brett H. Pritchard – proudly serving Killeen, Texas – is a divorce attorney who is well prepared to skillfully advocate for divorce terms that can help you protect your small business now and into the future. For more information about what we can do to help you, please do not hesitate to contact us online or call us at 254-501-4040 today.


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