Is your spouse’s small business part of your marital estate?

Is your spouse’s small business part of your marital estate?

| Jul 13, 2021 | Property Division

Dividing your property and debts will be one of the more difficult parts of getting divorced in Texas. Community property laws give each spouse a strong claim to property accumulated during the marriage and even income earned during the marriage. The bigger the asset, the stronger the incentive to claim it in your divorce. 

If your ex owns a small business or a professional practice, like an accounting firm, that business might be worth thousands of dollars. It might also generate revenue for years to come. Although you may not have an interest in actually operating the company, you may feel interested in its financial value. Can you claim the business as community property in a divorce?

When and how did your spouse acquire the company? 

How your spouse became an owner of the company will definitely influence what claim you have to it. If they inherited the business from a parent, that might make it separate property. Inheritances tend to have protection from division in divorce. The same is true for a business that someone owned before marriage or started with assets that they owned prior to getting married. 

However, if your spouse commingled the business accounts with marital ones or used the marital income to help sustain the company in times of crisis, it may be at least partially community property. Similarly, if you contributed to the business in any material way through your unpaid services, you may also have a claim. If your spouse started it during the marriage, it will almost certainly be community property in the eyes of the courts (absent a post-nuptial agreement).

Reviewing financial and business records can help you determine if you can claim some of the business’s value in an upcoming divorce