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How is the family business divided in a divorce?

| Apr 9, 2019 | Divorce |

Family businesses can be a great way for spouses to spend time together while fulfilling the family’s financial needs. When the couple decides to divorce, however, deciding what happens to the business can be a difficult decision. Blood, sweat and tears are the building blocks of a family business, and that type of investment can be hard to walk away from or watch change. For couples in Texas who are divorcing, there are several options they have for consideration regarding the future of the family business.

If the couple has a strong relationship outside of their marriage, they may be able to continue running the business together. This takes a couple who is able to put their personal problems aside for the sake of the business. This may be a difficult or even impossible situation for some.

In some situations, one spouse may decide to buy out the other spouse’s ownership interest to own the business independently. The value of the business would be determined by an outside appraisal, and the purchase price would be determined from that. Often, these purchases are not taxed, as they are performed during the execution of a divorce. If the company, instead of the other spouse, buys back the second spouse’s ownership shares, there may be tax consequences.

When it becomes impossible for the spouses to work together or when an agreement can’t be reached for one spouse to purchase the other’s shares, selling the company may be the best option. This allows the spouses to both move on with their new lives, unencumbered by the baggage of their former lives. It may take a while for the business to sell, but once it does, the proceeds will be divided between the two.

For many, determining what to do with the family business during a divorce is an emotional challenge. An experienced attorney specializing in family law can help the client explore all of the options available to him or her under Texas law. With the attorney’s assistance, the victim can determine the best option for him- or herself, and the rest of the family.

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