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How Are Businesses Divided in a Divorce?

a woman and a man signing a contract

Divorce is a complex process that involves the division of assets and liabilities, including businesses. At Diggs & Sadler, we understand that your business is not just a source of income but also a significant part of your life and identity. As a trusted family law firm in Houston, Texas, with years of experience and a deep understanding of divorce law, we are here to guide you through this challenging process.

In a divorce, businesses are considered part of the marital estate and may be classified as marital property. This means that they can be divided between the spouses, just like any other asset or liability. However, the process of dividing a business is not as straightforward as it might seem. It requires careful consideration and a fair valuation of the business.

The Process of Business Division in a Divorce

The most common method for handling private business interests in a divorce is for one spouse to buy out the other's interest. This allows the business to continue operating without disruption, and the spouse who is bought out receives fair compensation for their share.

Another option is to sell the business and divide the proceeds. This is often considered when neither spouse wants to continue running the business or if it's impossible for one spouse to buy out the other. However, this option requires finding a suitable buyer and agreeing on a selling price, which may not always be easy.

The final option, although rare, is co-ownership. This involves both spouses continuing to own and operate the business together after the divorce. While this can work in some cases, it can be challenging due to potential conflicts and the need for continuous communication and cooperation.

How to Protect Your Business in a Divorce

The first step to protect your business in a divorce is to get a fair valuation. A business valuation accurately values the business so its assets can be divided as part of the divorce. This process should be completed by a professional business appraiser to ensure accuracy and fairness.

Another critical step is understanding the concept of Equitable Distribution. This means that the court will classify your assets and liabilities and divide them fairly, although not necessarily equally. Therefore, it may be possible for you to keep your business while your ex-spouse receives a larger share of other marital assets.

Our Expertise at Diggs & Sadler

At Diggs & Sadler, we specialize in complex asset divisions, including businesses. We understand the intricacies of business valuation and division in a divorce. With our expertise and dedication, we can help protect your interests and negotiate a fair division of assets.

Our team of experienced attorneys also understands the emotional aspect of a divorce and the importance of empathetic representation. We are committed to providing personalized service to each client, addressing their concerns with compassion and understanding while advocating for their best interests.

Divorce can be a challenging process, especially when a business is involved. However, with the right legal guidance, it is possible to navigate this process successfully and ensure a fair outcome. If you're facing a divorce and concerned about how your business will be affected, contact us today. We're here to help.

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