Business Ownership and Valuation Issues in Texas

One issue that arises with some frequency in high-net-worth divorce cases is the division of a closely-held business. In most cases, the parties to a divorce will agree that one party will be awarded 100 percent of the business, with the right to own, operate, and receive funds from the business. The other spouse will, therefore, receive an appropriate amount of other marital property to ensure a just and right division of marital property.

In less frequent cases, the parties may agree that each will retain a percentage of the business, with one or both parties continuing to operate the business after the divorce. Another option is the sale of a business, with each party receiving a portion of the proceeds.

To determine the best course of action, and to protect your property rights in a divorce, it is critical to retain an attorney with experience determining the value of a closely-held business and dividing it properly. At Carter Morris, LLP, our knowledgeable divorce attorneys have extensive experience with the complex process of determining business ownership and valuation. Located in Houston, Texas, our firm is pleased to represent clients throughout Southeast Texas and the Greater Houston Area.

Southeast Texas Attorneys Familiar with Business Ownership and Valuation

Correctly determining the value of a closely-held business or professional practice is critical to achieving a fair divorce settlement for both parties. At Carter Morris, LLP, we work closely with expert forensic accountants and other business valuation professionals to accurately determine the value of the business.

Another important consideration in business ownership during divorce is whether the business is community or separate property. A business that was started during marriage is presumptively considered community property in Texas and thus must be included in the value of the overall community estate during a divorce. However, even a business that was started before marriage or with separate funds may be subject to claims during divorce if community property was used to fund or expand the business. Conversely, a business started during marriage could be characterized as separate property, depending on the circumstances surrounding its formation and capitalization. We will assist you with the complex process of determining whether your business is characterized as community property, separate property, or a mixture of the two.

Other important issues that we consider when dividing a business include:

• Lookbacks
• Valuation methodology
• Overcompensation
• Inadequate compensation
• Personal vs. professional goodwill
• Community property vs. separate property issues
• Management and transfer of assets during the divorce process
• Short-term and long-term implications of the asset allocation