If you're a business owner involved in a property division dispute, you may be concerned about how the court will handle your property throughout and after the property division process. Today, we're taking some time to explore the most common ways Texas courts deal with the distribution of businesses during property division cases.
How Do Businesses Get Divided During Property Division?
One of the first questions many business owners have about property division may be, "is my business considered separate or community property?"
Texas follows equitable distribution statutes, meaning individuals must split property "equitably" during property division.
In many cases, the income accrued by a business during the course of a marriage is considered community property, meaning the parties must split it equitably. An "equitable" split constitutes largely depends on each party's involvement with the business, the length of the marriage, how much income the business generated, and other factors.
So, How Do Businesses Get Divided?
There are a few common ways businesses get divided during property division:
- One party buys the other out. If both parties own a stake in the business, one may be able to buy the other out to gain full control of the business.
- The parties split the business. If both parties agree, they can split the business, turning it into two separate businesses with different brands - although this often causes competition issues.
- The parties co-own the business. If the parties believe they can do so effectively, they can choose to continue co-owning the business (assuming that's how their arrangement began).
- The parties sell the business. If both parties have a stake in the business and can't decide on a different arrangement, they can agree on the business's value and then sell it.
- The parties dissolve the business. Dissolving the business is usually a last resort. When neither party can reach an agreement on how to handle the business, including selling it, they can simply dissolve the business, rendering it defunct.
At the Law Office of Mark M. Childress, we can work with you to navigate your property division process.