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What happens to a business during divorce in Texas?

On Behalf of | Apr 9, 2022 | Property Division |

It can be both a stressful and rewarding process starting a business from the ground up and watching it grow. After nurturing a profitable business for years, the last thing a business owner wants is to lose it in property division proceedings during a divorce. Because of this, it can prove invaluable to become acquainted with all applicable legalities before any proceedings. 

Fair market value 

Since Texas is a community property state, in the event of a divorce, most family court judges will split marital assets 50/50 between two spouses. But to determine the value of a business, a business valuation must take place, which, in Texas, happens when a licensed business appraiser determines the business’ current fair market value. It is crucial for a concerned spouse to understand what is meant by fair market value. 

What is a buyer willing to pay? 

Fair market value refers to the price on average a buyer might pay for the business if purchasing it at the current time. All information pertinent to the purchase of a business, such as assets, liabilities, inventory and such, can be taken into account when determining how much buyers might be willing to pay to buy the business on the open market. It’s also important to realize that, in situations where a spouse who owns a business prevents a true valuation of the business by hiding assets, for example, he or she could be faced with a form of perjury. 

Those in Texas preparing to divorce can seek out professional support from various entities before proceeding into the process. Receiving guidance from an experienced legal team and financial advisors can often help to alleviate much of the stress associated with these challenging times, and it can significantly increase the odds of achieving the best possible outcome.