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      Business Division in Divorce | Southlake Divorce Attorneys

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      Author: Benson Varghese
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      When you divorce in Texas and own a business, the court will characterize your ownership interest as separate or community property, value the business (including goodwill), and then divide your share according to a “just and right” standard. How this plays out depends on the type of business entity you own, when and how it was acquired, and the strategic approach you take to protect your interests. In this article, we break down everything you need to know about business division in divorce.

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      Texas is a community property state, meaning assets acquired during marriage generally belong to both spouses equally. But businesses create unique complications. Was the company started before or during the marriage? Was it capitalized with separate or community funds? Has your spouse’s time and effort contributed to the business’s growth? The answers to these questions shape everything from the initial characterization to the final division.

      This guide examines how Texas courts treat business interests in divorce. Whether you own a corporation, LLC, partnership, or sole proprietorship, you’ll learn the legal principles at stake and how to protect what you’ve built.

      How Does Business Entity Type Affect Divorce Division?

      How Does Business Entity Type Affect Divorce Division?

      The legal structure of your business fundamentally affects how it will be treated in divorce. Each entity type has distinct characteristics regarding liability protection, ownership rights, management authority, and tax treatment. All of these impact the division analysis.

      Corporations: C-Corps and S-Corps

      A corporation is a separate legal entity distinct from its shareholders and officers. This has critical implications for divorce. Because the corporation is a separate entity, all assets of a corporation belong to the corporation, not the shareholders. As the court held in LeGrand-Brock v. Brock, 246 S.W.3d 318, 322 (Tex. App.—Beaumont 2008), “The accumulated earnings or surplus funds of a corporation constitute a part of its assets, and belong to the corporation, and not to the stockholders, until they have been declared and set apart as dividends.”

      This means a divorce court cannot directly award corporate assets to either spouse. It can only divide the ownership interest (shares of stock). The exception arises when the corporate veil can be pierced under the alter ego doctrine, discussed below.

      Key Corporate Characteristics:

      • Limited liability for shareholders protects personal assets from corporate obligations
      • Centralized management through a Board of Directors
      • Perpetual existence independent of shareholder changes
      • Flexible capital structure with multiple classes of stock
      • Formal requirements: bylaws, annual meetings, corporate minutes, and proper record-keeping

      C-Corporation vs. S-Corporation: The primary distinction lies in taxation. C-Corporations face “double taxation,” where the corporation pays taxes on income at the corporate level, and shareholders pay taxes again when they receive dividends. S-Corporations avoid this by electing pass-through taxation under Subchapter S of the Internal Revenue Code. The corporation itself pays no federal income tax, and income flows through to shareholders who report it on their individual returns.

      S-Corporation status has restrictions: no more than 100 shareholders, only individuals (and certain trusts and estates) as shareholders, no nonresident aliens, and only one class of stock. These limitations affect both business operations and divorce planning strategies.

      Limited Liability Companies (LLCs)

      The LLC has become the entity of choice for many Texas businesses due to its flexibility. An LLC combines the pass-through taxation of a partnership with the limited liability of a corporation. Under Texas Business Organizations Code (TBOC) §§ 101.001(1) & 101.052 , the rules governing LLC ownership and operation are contained in a “company agreement.”

      Tax Classification Flexibility: Under IRS “check-the-box” regulations, an LLC with more than one member can elect to be taxed as either a partnership (the default) or a corporation. A single-member LLC is treated as a “disregarded entity” for tax purposes. Its items of income, gain, loss, deduction, or credit are reflected on the owner’s personal tax return (typically Schedule C of Form 1040).

      This flexibility has significant implications for divorce. The tax treatment affects how the business is valued, how a buyout might be structured, and what tax consequences flow from various division methods.

      When Family Gets Complicated

      Partnerships: General, Limited, and Limited Liability

      Texas partnerships are governed by Chapters 151, 152, and 154 of the TBOC. A critical principle established by TBOC § 152.101 is that “a partnership is an entity distinct from its partners.” This has major implications for divorce. Partnership assets cannot be awarded by a divorce court to the non-partner spouse, as confirmed in McKnight v. McKnight, 543 S.W.2d 863 (Tex. 1976).

      General Partnerships: Each partner has joint and several personal liability for all partnership obligations. The partnership can be formed informally, even by handshake or course of conduct, without any state filings.

      Limited Partnerships: Must have at least one general partner (who has full liability and management authority) and at least one limited partner (who has limited liability but no management rights). The general partner’s unlimited liability is often addressed by having an LLC or corporation serve as the general partner.

      Limited Liability Partnerships (LLPs): Under TBOC § 152.801, a partner in an LLP “is not personally liable to any person, including a partner, directly or indirectly, by contribution, indemnity, or otherwise, for any obligation of the partnership incurred while the partnership is a limited liability partnership.” This liability shield has made LLPs popular for professional service firms.

      The Non-Partner Spouse’s Rights: Under TBOC § 152.406, when a court divides a partnership interest on divorce, the non-partner spouse (to the extent of their interest) is treated as a “transferee” of the partnership interest. A transferee has the right to receive distributions but no right to participate in management or control. The transferee cannot vote, cannot access partnership information beyond what’s necessary for a “proper purpose,” and cannot compel distributions.

      Sole Proprietorships

      A sole proprietorship is not a separate legal entity. The individual owner and the business are legally one and the same. This has significant implications for divorce. Unlike corporate or partnership assets, all property of a sole proprietorship can be directly characterized and divided as either separate or community property. See Zeptner v. Zeptner, 111 S.W.3d 727, 738 (Tex. App.—Fort Worth 2003). This includes furniture, fixtures, machinery, equipment, inventory, cash, accounts receivable, goods, and supplies.

      How Is a Business Characterized as Separate or Community Property?

      How Is a Business Characterized as Separate or Community Property?

      Texas Family Code § 3.002 establishes that community property consists of property acquired by either spouse during marriage. However, the characterization of business interests involves nuanced analysis that goes beyond this general rule.

      The Inception of Title Rule

      Texas follows the “inception of title” rule: property is characterized based on the circumstances that existed when the right to ownership arose. For a corporation, this is the date of incorporation. See Allen v. Allen, 704 S.W.2d 600, 604 (Tex. App.—Fort Worth 1986). A business incorporated before marriage is separate property. One incorporated during marriage is community property.

      For partnerships, inception of title occurs on the date the partnership was created or when a condition precedent to formation was satisfied. See Harris v. Harris, 765 S.W.2d 798, 802-03 (Tex. App.—Houston [14th Dist.] 1989).

      How Does Capitalization Affect Character?

      The character of an ownership interest can be affected by the character of the property used to capitalize the business. A business incorporated during marriage but capitalized entirely with separate property is characterized as separate property. See Hunt v. Hunt, 952 S.W.2d 564, 567 (Tex. App.—Eastland 1997).

      When mixed funds are used (part separate, part community), the business is characterized proportionally. In Vallone v. Vallone, 644 S.W.2d 455, 457 (Tex. 1982), the spouse received a proportionate share of the corporation’s stock because 47% of the corporation’s initial capitalization was traceable to separate property.

      If you’re going through a high net worth divorce involving business interests, understanding these characterization rules becomes especially important.

      How Are Business Distributions Treated?

      Cash Dividends: Treated like income from property. The character is based on when the dividend is distributed, not the character of the underlying stock. Cash dividends distributed during marriage are community property, even if derived from separate-property stock. Bakken v. Bakken, 503 S.W.2d 315, 317 (Tex. App.—Dallas 1973).

      Stock Dividends and Splits: Treated as mutations of property. They take the character of the stock from which they originated. Stock dividends on separate-property stock remain separate property. Wohlenberg v. Wohlenberg, 485 S.W.2d 342, 347 (Tex. App.—El Paso 1972).

      Partnership Distributions: Profits distributed during marriage are community property, regardless of whether the underlying partnership interest is separate or community property. Marshall v. Marshall, 735 S.W.2d 587, 594 (Tex. App.—Dallas 1987). However, buyout distributions retain the character of the spouse’s ownership interest. Harris v. Harris, 765 S.W.2d at 803.

      Business Goodwill VS. Personal Goodwill

      What Is the Difference Between Business Goodwill and Personal Goodwill?

      Perhaps no issue in business valuation for divorce is more contested than goodwill. Texas courts draw a distinction between business (commercial) goodwill, which is divisible community property, and personal (professional) goodwill, which is not.

      Personal Goodwill: The Nail v. Nail Doctrine

      In the seminal case of Nail v. Nail, 486 S.W.2d 761 (Tex. 1972), the Texas Supreme Court unanimously held that goodwill relating to a professional’s future earning capacity is not divisible property. Dr. Nail operated a sole proprietorship ophthalmology practice. The trial court found “accrued goodwill” of $131,024, but there was no evidence this goodwill had any value separate from Dr. Nail’s person or his individual ability to practice.

      The Supreme Court reasoned that personal goodwill “would be extinguished in event of [the professional’s] death, or retirement, or disablement, as well as in event of the sale of his practice or the loss of his patients.” It “may not be characterized as an earned or vested right… [but rather] is no more than an expectancy wholly dependent upon the continuation of existing circumstances.”

      The Court was careful to note, however, that it was “not concerned with good will as an asset incident to the sale of a professional practice, or that may exist in a professional partnership or corporation apart from the person of an individual member.” This opened the door for business goodwill to be treated differently.

      Business Goodwill: When It Is Divisible

      In Geesbreght v. Geesbreght, 570 S.W.2d 427 (Tex. App.—Fort Worth 1978), the court distinguished Nail and reversed a trial court that failed to consider goodwill in valuing a professional corporation. Dr. Geesbreght owned 50% of Emergency Medicine Consultants (EMC), a professional corporation that contracted with hospitals to provide emergency room services. Critically, if Dr. Geesbreght died or retired, he was contractually entitled to $50,000.

      The court articulated the key distinction: “If ‘John Doe’ builds up a reputation for service it is personal to him. If ‘The Doe Company’ builds up a reputation for service there may be a change in personnel performing the service upon a sale of its business but the sale of such business naturally involves the right to continue in business as ‘The Doe Company.'” The goodwill built up by the company would have ongoing value, specifically the opportunity to retain clients while new management proves itself.

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      The Two-Part Test for Divisible Goodwill

      In Finn v. Finn, 658 S.W.2d 735 (Tex. App.—Dallas 1983), sitting en banc, the Dallas Court of Appeals devised a two-prong test to determine whether goodwill is divisible:

      1. Goodwill must exist independently of the personal ability of the professional spouse.

      2. If such goodwill exists, it must have commercial value in which the community estate is entitled to share.

      In Finn, the court found that Mr. Finn’s law firm (Thompson & Knight) had goodwill independent of his personal ability, but concluded that goodwill had no commercial value because the Partnership Agreement severely restricted marketability of that interest. There was no mechanism for the partner to realize the value of the firm’s goodwill.

      Later cases have disagreed on whether goodwill can be characterized if there’s no mechanism to realize its value. Compare Von Hohn v. Von Hohn, 260 S.W.3d 631, 639-40 (Tex. App.—Tyler 2008) (goodwill could be considered because triggering events hadn’t occurred yet), with Finn (no mechanism to realize value meant goodwill couldn’t be included).

      Excluding Personal Goodwill from Valuation

      In Rathmell v. Morrison, 732 S.W.2d 6 (Tex. App.—Houston [14th Dist.] 1987), the court required that in valuing a business, the trial court must exclude value attributable to: (1) personal goodwill of the owner; (2) time, toil, and talent to be expended after divorce; and (3) the owner’s willingness not to compete with the business.

      The Texas Pattern Jury Charge (PJC 203.02) now instructs juries: “‘Personal goodwill’ is the goodwill that is attributable to an individual’s skills, abilities, and reputation. In determining the value of [the party’s] practice, you are not to include the value of personal goodwill or the value of time and labor to be expended after the divorce.”

      Understanding how commingling of funds affects your business’s characterization is also essential when addressing goodwill questions.

      When Can the Court Pierce the Corporate Veil?

      When Can the Court Pierce the Corporate Veil?

      When a spouse has used a business entity to shield assets that should properly be characterized as community property, the other spouse may seek to “pierce the corporate veil” under the alter ego doctrine. If successful, the court can treat individual corporate assets as part of the community estate.

      As the Texas Supreme Court explained in Castleberry v. Branscum, 721 S.W.2d 270, 271 (Tex. 1986): “The corporate form normally insulates shareholders, officers, and directors from liability for corporate obligations; but when these individuals abuse the corporate privilege, courts will disregard the corporate fiction and hold them individually liable.”

      The Two-Part Alter Ego Test: Alter ego permits piercing the corporate veil when (1) there is unity between a separate corporation and a spouse such that the two are no longer separate, and (2) the spouse’s improper use of the corporation has damaged the community estate beyond what might be remedied by reimbursement. Fuentes v. Zaragoza, 555 S.W.3d 141, 169 (Tex. App.—Houston [1st Dist.] 2018).

      Courts may disregard the corporate fiction when:

      • The fiction is used to perpetrate fraud
      • The corporation is operated as a mere tool or business conduit
      • The corporate fiction is used to evade an existing legal obligation
      • The fiction is used to circumvent a statute
      • The fiction is relied upon as protection for wrongful conduct

      Important Note: The alter ego doctrine cannot be used to pierce partnerships. Lifshutz v. Lifshutz, 61 S.W.3d 511, 518 (Tex. App.—San Antonio 2001). Partnership assets must remain with the partnership. The court can only divide the partnership interest.

      What Are Reimbursement Claims Under the Jensen Doctrine?

      What Are Reimbursement Claims Under the Jensen Doctrine?

      When community time, toil, and talent have been used to enhance the value of one spouse’s separate property business, the community estate may have a claim for reimbursement. This principle was established in Jensen v. Jensen, 665 S.W.2d 107 (Tex. 1983).

      In Jensen, the husband’s separate estate owned shares in RLJ Printing Company. The Supreme Court held that “the community will be reimbursed for the value of time and effort expended by either or both spouses to enhance the separate estate of either, other than that reasonably necessary to manage and preserve the separate estate, less the remuneration received for that time and effort in the form of salary, bonus, dividends and other fringe benefits.”

      This is now codified in Texas Family Code § 3.408(b), which provides for “a claim for reimbursement [for] inadequate compensation for the time, toil, talent, and effort of a spouse by a business entity under the control and direction of that spouse.”

      Practical Impact: If a business owner paid themselves below-market salary while reinvesting profits to grow the separate-property business, the community estate may claim reimbursement for the difference between actual compensation and fair market value for the owner’s services, to the extent that compensation enhanced the separate property’s value.

      Working with an experienced Fort Worth divorce attorney can help you identify and pursue viable reimbursement claims.

      Watch: Will My Business Be Appraised During My Divorce?

      What Are the Three Main Business Valuation Methods?

      Before any business can be divided, it must be valued. Business valuation is a specialized field. In contested divorces, each side typically retains its own valuation expert. The three primary approaches are:

      1. Income Approach: Examines the business’s earning potential and calculates value based on expected future profits, often using discounted cash flow analysis or capitalization of earnings. This approach is commonly used for operating businesses with consistent earnings.

      2. Market Approach: Compares the business to similar companies that have recently sold or are publicly traded. This approach requires finding truly comparable businesses, which is challenging for unique or specialized companies.

      3. Asset Approach: Totals the value of tangible and intangible assets minus liabilities. This approach is often used for asset-intensive businesses or those being liquidated.

      Which method is appropriate depends on the type of business. A professional practice may be valued differently than a manufacturing company or retail franchise. Courts rely heavily on expert testimony, and having a credible valuation expert can significantly impact the outcome. If you’re wondering how your specific business might be assessed, our guide on business valuation in divorce provides additional detail.

      At Varghese Summersett, our team of 70+ legal professionals includes board-certified family law attorneys who work with valuation experts, forensic accountants, and tax professionals to ensure accurate business valuations.

      What Are the Options for Dividing a Business in Divorce?

      What Are the Options for Dividing a Business in Divorce?

      Once the business is valued and characterized, the court must determine how to divide it. Texas courts have several options, each with distinct advantages and drawbacks.

      Buyout of the Other Spouse’s Interest

      The most common approach: the spouse who will continue operating the business pays the other spouse their share of the community interest. This can be structured as:

      • A lump sum payment at divorce
      • Installment payments over time (courts should “set the term for payment as short a period as possible without imposing a serious hardship,” Hanson v. Hanson, 672 S.W.2d 274, 279 (Tex. App.—Houston [14th Dist.] 1984))
      • Offset against other marital assets (for example, the other spouse receives a larger share of the home equity or retirement accounts)

      Security for Payment: When a money judgment is granted to achieve an equitable division, security should be provided unless there’s a compelling reason not to (Hanson). The court can impose an equitable lien on the business owner’s share of community property to secure the obligation.

      Sale of the Business

      Sometimes the only option is selling the business and dividing the proceeds. This may be necessary when neither spouse can afford to buy out the other, when the business isn’t viable without both parties’ involvement, or when the parties cannot agree on value. The disadvantage is that a forced or rushed sale often yields a lower price than a well-marketed transaction.

      Continued Co-Ownership After Divorce

      Though rare, some ex-spouses continue as co-owners post-divorce. This requires exceptional cooperation and is generally only workable when both parties have distinct roles. Significant risks include:

      Control Issues: If one spouse has management control, they may exploit it to the detriment of the non-controlling ex-spouse. Shareholders in closely-held corporations generally do not owe fiduciary duties to each other as a matter of law. Whether such a duty exists depends on circumstances and whether a confidential relationship exists. Pabich v. Kellar, 71 S.W.3d 500, 504-05 (Tex. App.—Fort Worth 2002).

      Phantom Income: In pass-through entities (S-Corps, partnerships, LLCs), management can retain earnings without distributing them. But owners must still report the income on their personal tax returns. See Cleaver v. Cleaver, 935 S.W.2d 491, 495 (Tex. App.—Tyler 1996).

      Take the first step toward resolution. Call Varghese Summersett today to discuss your options.

      What Are the Tax Implications of Dividing a Business?

      What Are the Tax Implications of Dividing a Business?

      The tax consequences of dividing a business can dramatically affect what each party actually receives. Competent representation requires understanding these implications.

      Tax-Free Transfers Under IRC § 1041

      Internal Revenue Code § 1041 provides that transfers of property between spouses incident to divorce are treated as gifts. No gain or loss is recognized. The receiving spouse takes the transferor’s basis (a “carryover basis”). This applies to transfers of stock or partnership interests from one spouse to the other.

      Caution: Section 1041 applies only to spouse-to-spouse transfers. It does not apply to transactions between the business entity and a spouse. Even if the spouses are the only partners, the partnership is a distinct legal entity. Temp. Treas. Reg. § 1.1041-1T, Q/A-2, Example 3.

      Corporate Redemptions

      A redemption occurs when a corporation acquires its own stock from a shareholder in exchange for cash or property. Redemptions can be useful for divesting a spouse of their ownership interest, but the tax treatment varies significantly:

      Capital Gain Treatment: If the redemption qualifies as a “complete termination” of the shareholder’s interest (IRC § 302(b)(3)) or is “substantially disproportionate” (IRC § 302(b)(2)), it’s treated as a sale or exchange, resulting in capital gain.

      Dividend Treatment: If the redemption doesn’t qualify under the safe harbors or as “not essentially equivalent to a dividend,” it’s taxed as ordinary dividend income, potentially a much worse result.

      Family Attribution Rules: IRC § 318 attributes stock ownership between certain family members (spouses, children, grandchildren, parents) when determining whether a redemption qualifies for capital gain treatment. There is no attribution between spouses who are legally separated under a decree of divorce. This can be used strategically in structuring post-divorce redemptions.

      New Chapters Start Here

      Tax-Free Corporate Divisions

      When divorcing spouses own a corporation that has multiple business lines, it may be possible to split the corporation tax-free under IRC § 355. There are three forms:

      Spin-Off: Stock of a subsidiary is distributed pro rata to shareholders. The parent company shareholders now own both companies.

      Split-Off: Parent company stock is redeemed in exchange for stock of the subsidiary. Typically results in one shareholder (or group) owning the parent and another owning the former subsidiary. This is usually the preferred method for divorce.

      Split-Up: The parent company liquidates and distributes stock of at least two subsidiaries. Only the subsidiaries survive.

      These transactions require strict compliance with statutory requirements, including: two active businesses that have existed for at least five years, a valid business purpose, no “device” for distributing earnings, distribution of “control” (80% voting power), and continuity of ownership interest.

      For additional insights into tax planning when a business is involved, see our article on tax planning for business owner divorce.

      How Do Shareholder and Buy-Sell Agreements Affect Divorce?

      How Do Shareholder and Buy-Sell Agreements Affect Divorce?

      Operating agreements, shareholder agreements, and buy-sell agreements can significantly affect how a business interest is treated in divorce.

      In Mandell v. Mandell, 310 S.W.3d 531 (Tex. App.—Fort Worth 2010), the shareholder agreement contained provisions specifically addressing valuation of stock ownership and value in the event of a shareholder’s divorce, as well as restrictions on stock sales. The court held the agreement represented sufficient evidence necessary to value the interest for purposes of dividing the community estate.

      However, when an agreement is silent regarding divorce, it may not be conclusive. In Von Hohn v. Von Hohn, 260 S.W.3d at 640, the partnership agreement specified payment terms for death, withdrawal, retirement, or expulsion, but not divorce. The husband hadn’t withdrawn and had no plans to. The court held the agreement did not control valuation for divorce purposes.

      Forum Selection Clauses: Business agreements may designate a specific forum for resolving disputes. In Loya v. Loya, 507 S.W.3d 871 (Tex. App.—Houston [1st Dist.] 2016), even though the wife was not a signatory to a shareholders’ agreement containing a forum selection clause, because she sought a direct benefit by claiming the shareholders breached duties to her, she was bound by the clause.

      How Are Stock Options and Restricted Stock Treated in Divorce?

      How Are Stock Options and Restricted Stock Treated in Divorce?

      Employer-provided stock options and restricted stock present unique characterization challenges because they often straddle the marriage period. Texas Family Code § 3.007(d)-(f) establishes specific formulas.

      Pre-Marriage Grant with Post-Marriage Vesting: If the option or restricted share was granted before marriage but requires work during marriage before it can be exercised or restrictions removed, the separate property interest equals:

      (Days from grant date to marriage date) ÷ (Days from grant date to exercise/vesting date)

      During-Marriage Grant with Post-Divorce Vesting: If the option or restricted share was granted during marriage but requires post-divorce work before exercise or restriction removal, the separate property interest equals:

      (Days from divorce to exercise/vesting date) ÷ (Days from grant date to exercise/vesting date)

      Each individual grant must be characterized separately. A spouse may have multiple grants with different vesting schedules, each requiring its own calculation.

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      How Can You Protect Your Business Before or During Divorce?

      The best time to protect a business is before marriage or at least before problems arise. A well-drafted prenuptial agreement that clearly identifies the business as separate property and addresses future appreciation can prevent enormous conflict.

      Protective Steps for Business Owners:

      • Maintain meticulous records of the business’s value at the time of marriage
      • Avoid commingling personal and business finances
      • Pay yourself reasonable compensation rather than reinvesting all profits (this reduces Jensen claims)
      • Document your spouse’s involvement (or lack thereof) in the business
      • If the business was capitalized with separate property, maintain clear tracing documentation
      • Consider a postnuptial agreement if you didn’t execute a prenuptial agreement

      The Burden of Proof: Texas Family Code § 3.003 presumes all property possessed during marriage is community property. The spouse claiming separate property status must prove it by clear and convincing evidence. Without solid documentation, courts often default to treating the entire business as community property.

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      What Role Does Discovery Play in Business Division Cases?

      Discovery (the legal process of gathering information from the other side before trial) is especially important when one spouse controls access to financial records while the other has limited knowledge of the company’s true value.

      Common Discovery Tools:

      • Interrogatories: Written questions that must be answered under oath
      • Requests for Production: Demands for financial records, tax returns, bank statements
      • Depositions: Oral testimony given under oath, subject to cross-examination
      • Subpoenas: Compel third parties (accountants, bookkeepers) to produce documents or testify

      Forensic Accountants: In complex cases, forensic accountants can analyze financial records to determine whether income has been underreported, whether personal expenses have been run through the business, or whether assets have been hidden. They can reconstruct financial history and identify discrepancies that might otherwise go undetected.

      Protect what matters most. Contact us today for guidance on your business division case.

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      Frequently Asked Questions About Dividing a Business in Texas Divorce

      Can a court award my spouse part of my business in divorce?

      Yes, but only to the extent it’s community property. The court can divide the ownership interest (stock, LLC membership, partnership interest) but generally cannot award specific business assets directly unless the business is a sole proprietorship or the corporate veil is pierced.

      Is my business always 50/50 community property if started during marriage?

      Not necessarily. Texas requires a “just and right” division, which doesn’t always mean 50/50. Factors like each spouse’s contribution, earning capacity, fault in the breakup, and tax consequences can affect the split.

      What happens if my spouse worked in the business without pay?

      If your spouse contributed labor without compensation, this strengthens arguments that the business (or its appreciation) is community property. It may also support a reimbursement claim under the Jensen doctrine.

      Do I have to sell my business to pay my spouse?

      Not always. You may be able to buy out your spouse’s interest using other assets, make installment payments over time, or offset their share against other property you receive.

      How long does a divorce involving a business take?

      Business valuation and division add complexity. While Texas has a 60-day waiting period for all divorces, cases involving businesses typically take 6 months to 2 years depending on the complexity and whether the parties can reach agreement.

      Get Experienced Legal Help with Business Division in Your Texas Divorce

      Dividing a business in a Texas divorce requires sophisticated legal analysis spanning entity law, community property principles, valuation methodology, and tax implications. The outcome depends heavily on facts that must be developed through careful investigation and expert analysis.

      Whether you’re the business owner fighting to preserve what you’ve built or the spouse seeking a fair share of marital assets, you need attorneys who understand these complexities. At Varghese Summersett, we help families throughout Texas handle even the most complicated property division disputes. Our team works with valuation experts, forensic accountants, and tax professionals to protect your interests.

      If you’re facing a divorce involving a business, contact us to schedule a consultation and learn how we can help.

      Benson Varghese is the founder and managing partner of Varghese Summersett, where he has built a distinguished career championing the underdog in personal injury, wrongful death, and criminal defense cases. With over 100 jury trials in Texas state and federal courts, he brings exceptional courtroom experience and a proven record with Texas juries to every case.

      Under his leadership, Varghese Summersett has grown into a powerhouse firm with dedicated teams across three core practice areas: criminal defense, family law, and personal injury. Beyond his legal practice, Benson is recognized as a legal tech entrepreneur as the founder of Lawft and a thought leader in legal technology.

      Benson is also the author of Tapped In, the definitive guide to law firm growth that has become essential reading for attorneys looking to scale their practices.

      Benson serves as an adjunct faculty at Baylor Law School.

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