Divorce is always complex—but when a business is involved, the stakes are even higher. Whether you own a small family-run operation or a thriving company, your business could be subject to division under Texas community property laws.
At Haugen Law Firm, P.C. we work with business owners throughout Denton County, Collin County, Cooke County, Dallas County, and Tarrant County to protect what they’ve built and help them navigate divorce with clarity and strategy. If you’re a business owner facing divorce in Texas, here’s what you need to know.
Is Your Business Community Property or Separate Property?
In Texas, community property includes most assets acquired or built during the marriage. This means your business—or a portion of it—could be considered community property if:
- It was started during the marriage
- It grew significantly during the marriage, even if started beforehand
- Marital funds or labor contributed to its operations or growth
- Separate property generally includes businesses:
- Started before the marriage
- Funded and operated without any marital contributions
- Inherited or gifted solely to one spouse
Important: Even if your business began as separate property, any increase in value or income during the marriage may be subject to division.
How Texas Courts Handle Business Division
Texas courts aim for a “just and right” division of community property, which doesn’t always mean a 50/50 split. When it comes to businesses, courts typically won’t order the company to be split down the middle. Instead, they may:
- Award the business to one spouse and compensate the other with other assets (like cash, property, or retirement funds)
- Value and sell the business, then divide the proceeds (rare and usually avoided)
- Use a structured buyout, allowing one spouse to pay the other over time
Most courts prefer to keep the business intact and functioning—especially if only one spouse is actively involved in its operations.
Valuing the Business
Accurate business valuation is essential and typically requires a professional forensic accountant or business appraiser. Factors considered include:
- Annual revenue and profits
- Tangible and intangible assets
- Goodwill and brand reputation
- Industry and market conditions
- Owner’s role and compensation
Valuation can become a key battleground in the divorce, so it’s crucial to have experienced legal and financial guidance.
Strategies to Protect Your Business
If you’re planning ahead—or currently navigating a divorce—these strategies can help shield your business:
1. Prenuptial or Postnuptial Agreements
Clearly define the business as separate property and outline terms for future division.
2. Maintain Clear Financial Records
Keep business and personal finances separate. Avoid using marital funds for business operations.
3. Limit Spouse Involvement
The more your spouse contributes to the business, the stronger their claim may be.
4. Use Buy-Sell or Shareholder Agreements
If you have business partners, formal agreements can prevent forced sales or unwanted ownership changes.
5. Pay Yourself a Fair Salary
Avoid underpaying yourself and reinvesting all profits, which may inflate the business’s value in court.
Mistakes to Avoid
- Assuming the business is automatically separate property
- Underestimating how business growth during marriage may be divided
- Hiding assets or manipulating records (which can backfire legally)
- Waiting too long to get legal advice
Haugen Law Firm, P.C.: Protecting What You’ve Built
Your business represents years of hard work and dedication. At Haugen Law Firm P.C., we understand the complexities of protecting your business in a Texas divorce. We work closely with financial experts to accurately value your business and fight for your interests.
We’re proud to serve families and individuals across Denton, Collin, Cooke, Dallas, and Tarrant Counties with trusted legal guidance in family law, criminal defense, and estate planning. If you have questions about your legal rights or need personalized support, our dedicated team is here to help. Contact us today!