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Dealing with a small business in a divorce

On Behalf of | Aug 16, 2021 | Divorce |

One common property division issue in a Texas divorce is how to accurately value a business that is family owned and operated. Primary owners are typically the divorcing couple, even though this is not always the case, and arriving at an fair valuation amount can be a challenge without professional help. There are often several considerations before the process even begins, such as the contributions made to opening the business or potential prior ownership before marriage. Each case is unique in some aspect, and a complete evaluation of the entity is essential in most instances.

Assets and liabilities

Almost all businesses will have asset and liability issues to address when the owners are divorcing. Depending on the size and nature of the business, the value can often be determined by an inventory of assets and liabilities. Designating financial liabilities following a divorce is often a component of the separation that many do not realize until it comes down to property division.

Business valuation mediation

One of the most effective methods of accurate business valuation is a professional evaluation conducted and presented during divorce mediation. Representatives from both sides can present any financial claims on the business and have a business evaluation professional perform a comprehensive assessment that addresses all claims.

Community property laws matter

It is important for each spouse to understand that the court views a marriage much like a business. Even when a prenuptial agreement designates certain property as personal prior to a marriage, the income that is earned from the business is still community property when a divorce is being sought. Not all business divorce cases are equal. In addition, other investments earnings made and received during the term of a marriage will be considered in a divorce settlement mediation as well.