Family businesses are often more than a source of income. They represent years of time, effort, and sacrifice. When a couple decides to divorce in Texas, questions immediately come up. Who owns the business? Who controls it? Will one spouse lose everything? What if both built it together? This topic can feel stressful, but with clear information, it becomes easier to understand.
In Texas, businesses are treated like any other asset in a divorce. Texas is a community property state. That means most property gained during the marriage belongs to both spouses, even if one spouse’s name is on the paperwork. Because of that law, a business can become a major part of the Divorce asset split process.
This article explains what can happen to a family business during divorce in Texas, how the Texas Family Code guides property division, and what options couples usually have.
For personalized advice, please contact Attorney Tyler R. Monahan, partner at Turner-Monahan, PLLC, to discuss your case.
How Texas Law Views Family Businesses in a Divorce
Community vs Separate Property
Under Texas Family Code Section 3.002, community property includes property, income, or assets gained during the marriage. That means if a business was created after marriage or grew during the marriage, both spouses may have rights in it.
Under Texas Family Code Section 3.003, separate property includes anything owned before marriage, along with gifts and inheritance. So, if a spouse owned the entire business before the marriage, it is likely separate. But there is a catch. If the business grows during the marriage because of either spouse’s work or money, that growth may be considered community property.
“Just and Right” Division
Texas Family Code Section 7.001 says the court must divide community property in a way that is “just and right.” This does not always mean a perfect 50/50 split. A judge can consider many things such as the financial situation of each spouse, who ran the business, and what role each played.
This is important in contested divorce cases where spouses disagree about value or ownership.
Common Business Ownership Scenarios
1. One Spouse Built the Business Alone
Even if one spouse worked alone, the business may still be considered community property if it started after marriage. The other spouse may receive money or other assets equal to their share of the business value.
Example:
A husband opens a restaurant during marriage, and the wife works as a teacher. During a divorce, the restaurant is community property. The wife may receive a fair share of the business value.
2. A Business Existed Before Marriage but Grew Later
The original value may remain separate property. But any increase in value during the marriage can be community property.
Example:
A wife owned a store before marriage worth $100,000. After marriage, the store grows to $300,000 because both spouses work there. That $200,000 increase can be divided.
3. Both Spouses Own the Business Together
If both spouses are actively working in the business, the divorce process must address both ownership and future operations. One spouse may buy out the other. Or they may decide to sell the business and split profits.
4. Professional Practices
Medical offices, law firms, and similar practices often include rules that limit ownership. Courts still place a value on the business, even if only one spouse can legally own it.
How Valuation Works
Valuing a business is one of the biggest steps. A qualified financial expert looks at income, assets, reputation, customer base, equipment, and debt. Spouses often hire their own experts if they disagree on the value. This can make the divorce longer, especially in High-Net-Worth Divorce cases.
Protecting the Business Before Problems Start
Couples sometimes use agreements to set rules in advance.
- A prenuptial agreement created before marriage
- A postnuptial agreement created during marriage
These contracts can control how the business is divided. A family law attorney in Texas can help create these documents properly so they are enforceable.
What Happens After the Business Is Divided
Courts usually choose one of the following outcomes:
- One spouse keeps the business and pays the other their share
- Both spouses keep shares in the business with clear rules
- The business is sold, and profits are split
The goal is always fairness and stability for the family, especially when that business supports children and household needs.
Texas Family Code Can Affect Control of the Business
Judges can consider behavior during marriage and divorce. Poor financial decisions, hiding money, or trying to harm the business can lead to a spouse receiving less. Because of this legal risk, many people choose to hire a divorce attorney early in the Divorce proceedings.
Someone with experience, like a DFW divorce attorney, understands how courts treat business assets and can help protect what matters most.
Frequently Asked Questions About Family Businesses in a Texas Divorce
Can the court force us to sell the family business
Yes. If both spouses cannot agree and there is no good way to divide it, a judge may order a sale and split the proceeds.
What if my spouse never worked in the business
They may still receive part of the value because Texas views marriage as a partnership where both share the benefits of property earned during the marriage.
Can I hide business finances during divorce
No. Hiding money is illegal and can cause serious penalties. A judge may award more property to the other spouse.
What if we both want to keep working in the business
It is possible, but risky. A clear agreement must exist to avoid future disputes. A best divorce attorney near me can help write fair terms.
Do I need a lawyer for this kind of case
Family businesses make divorce more complex. Speaking with the Turner-Monahan Law Firm for Divorce assistance is the safest step. It helps protect your financial future and peace of mind.
Turner-Monahan PLLC: Experienced Family Law Representation You Can Trust
A family business is often the heart of a family’s financial life. When divorce happens, ownership and value questions can be complicated, especially under Texas community property laws. The right guidance can help you keep stability and protect what you built.
Turner-Monahan, PLLC has supported Texas families since 1973. Their team understands how business assets are handled under the law. Whether you need property division help or full Divorce process support, their attorneys provide clear direction at every step. With strong experience, responsive service, and deep understanding of Texas Family Code, they work to protect your rights and secure a fair result.
If you are facing divorce and own a family business, Turner-Monahan PLLC is here to guide you. Schedule a free, no-obligation consultation with Attorney Tyler R. Monahan to discuss the details.
Disclaimer
The commentary and opinions are for informational and educational purposes only and are not intended to provide legal advice. You should contact an attorney in your state to obtain legal advice concerning any particular issue or problem. You can become a client and enter the attorney-client privilege only after hiring Turner-Monahan, PLLC, by signing a written retainer agreement.
