Portrait of John K Grubb

Texas Divorce and Prenuptial Agreement

4600 Post Oak Place, Suite 301 • Houston, Texas 77027-9705

Phone: 713-877-8800 • Fax: 713-877-1229

Spouses Who Own Businesses Together But Then Divorce

This week we have discussed some of the problems posed by business ownership come divorce time – spouses can use businesses to hide assets and uncovering those assets is typically a difficult and costly matter. Today we go into what happens to the business itself. The solution to that problem depends on the state in which you are divorcing.

Texas is one of nine community property states, meaning that, at divorce time, the court must first determine whether the business is separate property or community property before dividing it. If the business is separate property (only one spouse is involved with it), the divorce will not ordinarily affect it. Those engaged to be married may wish to consider a prenuptial agreement in order to specify that the business should be treated as separate property. If the business is community property (both spouses’ time, money or resources go into it at least somewhat), the situation is more complicated.

The preferred option is usually to keep the business running. The business will go to one spouse, but that spouse will have to provide other assets in exchange to the other spouse. For instance, for the spouse who does not receive the business and will no longer play a role in its operation, he or she might receive the family house, retirement funds or outright cash in exchange for giving up his or her interest in the couple’s business.

An additional concern for couples who own businesses is the health of the business during the divorce. While things might turn out fine once the divorce is final, the stress of the divorce can have a big impact on business owners while things remain uncertain. Work with an attorney and experts who can take your mind off the stresses of divorce and let you focus on your business.

Did you and your ex-spouse jointly run a business together? How did you handle it come divorce time?

John K. Grubb & Associates, P.C. – Houston divorce lawyers

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