Your Trusted Family Law Resource

Property division in divorce: Who will get the family business?

On Behalf of | Mar 26, 2016 | Property Division |

According to a study by a university located in another state, over 80 percent of businesses nationwide — including many in Texas — are family owned. What happens to a business that is owned by a husband and wife in the event of a divorce? Texas is a community property state, and relevant laws govern property division. A Texas marriage creates a community, and although assets owned before the marriage remain the property of the owner, assets acquired during the marriage generally form part of the community.

When a divorce dissolves the community, the jointly owned assets are divided between the two spouses. This process can prove to be complicated, especially when a business is part of the property. It is not uncommon for a person to start a business before a marriage and continue building it during the first years of the marriage. Although it may eventually be successful, the first years often involve one partner working extremely hard at it while taking little or no salary, and the other spouse working at a different job to maintain the household.

Although one spouse owned the original business, what happens if the marriage fails after 10 or 20 years and the other spouse had sacrificed much over the years of building up the business? Are they each entitled to a fair share of the firm? These and many more situations can arise during a complex property division process.

Texas residents may want to be proactive and take the necessary steps to protect the rights and assets of each spouse by drafting a prenuptial or postnuptial agreements, as appropriate. Each party, with the support of their respective attorneys, can address all assets and the manner in which they want property division to be handled in the event of one spouse’s death or a divorce. This may prevent costly and traumatic litigation in the future.

Source:, “Business partners’ divorce fraught with traps”, Joel Jacobsen, Accessed on March 25, 2016