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How is a family business divided in a divorce?

When a married couple decides to part ways, they likely know they will now face many decisions about finances, children, division of assets and potentially many other issues. Many divorcing people find this time very stressful. For most Texas divorcing couples, property division is a significant source of stress during the divorce process, and those who own a family business may find negotiations in this area particularly challenging.

Before deciding what to do with the business, the divorcing couple should seek a formal appraisal from an unbiased third party. Next, they will need to decide how to divide the business equitably, and typically, they will have three options. Most commonly, one spouse will continue to run the business and will buy out the other spouse’s interest in it, based on the appraised value, and in this case, the direct purchase of shares is typically a nontaxable event. In some cases, both individuals will continue to run the business together. For obvious reasons, many divorcing couples do not choose this option since they may find working together amicably a bit challenging.

Finally, some couples choose to sell the business and divide the proceeds. However, couples who choose this option are likely adding time to the divorce process, since the selling process may take some time. Meantime, they will have to find a way to keep the business running that works for both of them.

Each divorcing couple with a family business must make the decision that works best for each of them, financially and emotionally. Some may prefer to make a fresh start, while others are able to continue an amicable working relationship post-divorce. A Texas family law attorney experienced in all aspects of the divorce process, including property division, can help divorcing couples make such important decisions.