The Love DuCote Law Firm LLC Legal Blog

Is your business separate property?

A person’s business is their own. But if you began your business after you married, then it might belong to your soon-to-be-ex also.

If you are a business owner considering divorce, or in the middle of one, you may have questions about if your business is community or separate property. As we’ve discussed before, Texas is a community property state, and that means all property acquired during a marriage is divided at divorce. That would include your business if you started it after getting married. But things might be more complex than they first seem.

Complexity in property division

To fully grasp the scope of Texas’s community property law, one must understand that it covers not simply property but also debts. The worth of an asset, such as a business, might come with significant debts as well. The interplay of debt and asset is one such complexity that means the property division’s result isn’t as cut and dried as it would first seem.

Additionally, starting a business takes capital. If you raised capital by selling off a piece of separate property such as:

  • An heirloom
  • A gift from a family member
  • Property you owned before the marriage
  • Money you possessed separately before marrying

Then it’s possible your business may remain separate property as well.

What do I do if my business is community property?

If your business is community property, then there is still some room for negotiation. A business is just one of the assets that you and your ex have. Just like it would be nearly impossible to divide a home in half physically, organizationally dividing a business offers the same challenges.

Aside from the obvious solution of liquidation, the division process becomes a question of negotiation. While often a negotiation is not a guarantee, it leaves open several possibilities to protect your assets.

Set priorities and get aggressive

If you want to protect your business through your divorce, the best opportunity is to make a clear set of priorities. Decide what you can and can’t accept, and then speak to an attorney. The ideal representation can fight for your priorities in divorce successfully by taking aggressive actions.

When your livelihood is in danger, you take steps to protect it. And you don’t have to take those steps alone.

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