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Divorce and the family business

Shared assets must be divided equally in a Texas divorce. In some cases, this might include a family business. Couples who get along may opt to keep running a business together after the divorce. More often, the business will be sold.

The company can be sold by both spouses, or one spouse might take over from the other. The former is not always as easy as it might seem. While it allows partners to completely sever their financial ties with one another, it might take a long time as they wait for the company to sell. During this time, one or both spouses may need to continue running the business.

What usually happens is one spouse leaves the company and the other spouse remains. If the remaining spouse has the liquidity to buy out the other, this can usually be accomplished without incurring taxes. However, there are options if the spouse does not have this liquidity. One possibility is to pay the other spouse off gradually with a settlement note. The other is to have the company buy out the other spouse's shares. However, capital gains tax can be high if this is not structured carefully.

When dividing other property, spouses should keep in mind that they do not necessarily have to split everything 50/50. Some couples find that it is easier if each of them keeps certain assets. For example, one ex may have no interest in the marital house while the other hopes to keep it. The person who wants the home may allow the other spouse to keep a retirement account of roughly equal value. An attorney could help a divorcing spouse through this property division process.

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