New Braunfels Divorce Attorney for Business Owners

Lawyer Helping Divide Business Assets During Divorce in New Braunfels, Texas

A family business often represents more than a source of income. A business may have been built over decades in which a person made sacrifices and earned a good reputation with customers. When the owner of a business goes through a divorce, both spouses may have a stake in what the business is worth and who will control it going forward. The outcome can affect not only the spouses but also their business partners, employees, and others who are involved.

The divorce lawyer at Hill Family Law understands what is at risk when a business will need to be divided along with other assets in a high-net-worth divorce. With his experience representing business owners and their spouses in Texas divorces and his understanding of how community property laws apply to businesses, he can work with clients to find solutions that will protect their interests.

Is a Business Community Property or Separate Property?

The first question in any business owner's divorce is whether the company is part of the marital estate. A business formed during a couple's marriage is presumed to be community property. However, a business started before the couple's wedding or a company that was inherited from a parent is generally considered to be the owner's separate property.

That is not the end of the analysis, however. If both spouses poured years of work into a separate property business, the business owner may be required to reimburse the marital estate for the contributions that were made. In other words, a business can remain one spouse's separate property, but the marital estate may receive credit for the labor that helped the business grow.

Why an Accurate Business Valuation Is Important

A professional valuation will give both spouses an understanding of what a business is worth and how it may be addressed when dividing property. If the business owner will keep the company, the other spouse will typically receive other assets to balance the division. If a business is undervalued, the non-owner spouse may not receive a fair share of marital assets. On the other hand, an inflated value may force the owner to give up more marital assets than would be fair.

Separating Personal Goodwill From a Business's Value

The goodwill of a business is an important factor in its valuation. However, there is a difference between enterprise goodwill and personal goodwill. Enterprise goodwill, such as a well-known brand or a loyal customer base, can be divided. Personal goodwill tied to the owner's skill and reputation is not considered to be divisible. For dentists, physicians, accountants, and other professionals, this distinction can have an impact on the value of a practice.

Accounting for Seasonal or Local Factors

Many New Braunfels companies, such as restaurants that depend on tourist traffic or contractors who perform work during certain times of the year, may see revenue swing widely from one season to the next. A qualified appraiser will look at several years of records to gain a full understanding of how changes in a business over the years have affected its value.

Options for Dividing Business Ownership

Once a business has been valued, the spouses may have several options to choose from as they decide what to do with the business. These options include:

One Spouse Keeps the Business

This is the most common method used by business owners in a divorce. The spouse who runs the company will keep full ownership, and the other spouse will receive other property, such as more equity in real estate property or a larger share of retirement savings. When there are not enough other assets to offset the value of a business, the owner may agree to make payments over time.

Selling the Business

If neither spouse wants to continue owning the business, or if a buyout is not financially realistic, the company can be sold, and the proceeds can be divided between spouses. In these cases, steps will need to be taken to receive a purchase price as the business's fair market value.

Continuing as Co-Owners

Some former spouses may choose to keep owning a business together. This can work when both spouses have a strong working relationship, but it will require a detailed agreement that will address management responsibilities and the division of profits.

Reviewing Agreements That May Affect the Ownership or Division of a Business

Our attorney can work with clients to review partnership agreements, shareholder agreements, and LLC company agreements. Buy-sell provisions in these agreements may restrict transfers to a spouse, or they may provide a formula for valuing ownership interests. A prenuptial agreement or postnuptial agreement between spouses may also determine how a business will be treated during a divorce.

Contact Our New Braunfels, TX Business Owner Divorce Lawyer

Whether you own a company or are married to a business owner, the business may be one of the most valuable and most disputed assets in your divorce. At Hill Family Law, our lawyer can help you perform a business valuation and advise you on the best strategies for dividing business assets while protecting your interests. Contact our new Braunfels, Texas business asset division attorney at 830-229-2129 to schedule a free consultation.