02 Oct Business Valuation in Texas Divorce: Protecting Family-Owned Assets
Business Valuation in Texas Divorce: Protecting Family-Owned Assets
Divorce can be complex for any couple, but when a family business is involved, there’s even more at stake. In Texas, the value of a company can significantly influence the division of property. Understanding how business valuation works, when community versus separate property rules apply, and how experts determine value can help protect your financial future during a divorce.
Why Business Value Matters
In Texas, most property acquired during marriage is considered community property, which typically includes any business started or purchased during the marriage. Even if one spouse runs the business day-to-day, both spouses often share ownership in the business interest.
For many families, the value of a business can be one of the most significant assets in a divorce. Whether it’s a small shop or a growing professional practice, an accurate valuation helps ensure a fair division of assets. If the business is undervalued, one spouse could lose out on their fair share. If it’s overvalued, the other may end up giving up too many assets to keep it.
Community and Separate Property
If the business was started or acquired during the marriage, it’s typically treated as community property. If it was owned before the marriage, it’s considered separate property.
However, if community funds or time were used to support a separate property business during the marriage, the community estate may have a right to reimbursement. For example, if joint savings were used to pay off a business loan, or one spouse worked for years without receiving a salary, the community can claim the value of that contribution.
How Experts Determine Value
Judges rely on financial experts to assess the value of a business. These valuation professionals review financial records, assets, debts, and market conditions to provide a clear picture of the business’s value.
Different types of businesses may require different valuation methods:
#1. Asset approach: Adds up what the business owns and subtracts what it owes.
#2. Income approach: Looks at past earnings to estimate future cash flow.
#3. Market approach: Compares the business to similar ones that have recently been sold.
What Happens Next
Once the value is set, the court usually awards the business to the spouse who operates it. That spouse may buy out the other’s share or offset the value of the other’s share with other assets. In some cases, the court can order a sale, but that’s less common.
These decisions can have lasting effects on both spouses’ financial futures, which is why skilled legal guidance is essential.
Business valuation is one of the most important parts of dividing property during a divorce. Understanding the process, knowing your rights under Texas law, and working with qualified experts can help you protect your interests and plan for the future.
For families in Denton and Wise Counties, our team regularly works with business owners navigating Texas divorce and valuation issues. We can help you understand your options and create a clear strategy for moving forward.