There are often many financial aspects to take into consideration before proceeding through the process of bringing a marriage to an end. This can especially be the case for a high-asset divorce, where the financial stakes are much higher and there are more complexities involved during the division of property. One particular matter that can require due diligence and preparation involves how the final divorce settlement could impact a Texas spouse’s business ownership.
Texas is a community property state where a court is authorized to divide a divorcing couple’s marital property in an equal manner. Because of this, ensuring that all eligible assets are included in the process could be critical to one’s financial future. If one of the spouses is a business owner, the key determination as to whether or not the business will be eligible for division is if it qualifies as separate or marital property.
What specific criteria will a court evaluate?
Most items owned by one of the spouses before the marriage are considered separate property and not subject to division, while assets acquired during the marriage are typically considered marital property. However, the determination of a spouse’s business ownership can be a complex matter, and a court will typically evaluate the following before deciding how the business is classified:
- Was the business created before or during the marriage?
- How involved in the business’s daily operations was the spouse who didn’t own it?
- How much indirect involvement did the non-business-owning spouse have by handling family matters that allowed the other spouse to better tend to his or her company?
In situations where a business is eligible for division, determining an accurate valuation for it can have a significant impact on the divorce settlement. Acquiring the services of a qualifying business appraiser could prove invaluable since this can be a daunting task with all the financial intricacies involved along with multiple valuation methods from which to choose. Support and guidance from an experienced Texas family law attorney throughout all of the divorce proceedings can also help prevent any missteps and increase the odds of achieving the best settlement possible.