family law San Antonio

San Antonio Divorce Attorneys for Business Owners

Trusted legal counsel for protecting your business interests during divorce in South Texas

Divorce is not uncommon, and thousands of Texans go through it every year. In fact, if you are reading this page right now, you likely have questions. The divorce process can be a complicated one even if your marital property division goals are relatively simple. However, if you own a business, things can get difficult. Will I be able to keep it? Will we have to sell the business? Is my spouse entitled to anything?

The San Antonio family law attorneys at Grable Grimshaw PLLC have answers. We can help you unravel your business assets, your marital assets, and your finances to put together a solid divorce agreement that meets your personal and business goals. We understand you have worked hard to build your business and want to protect your investment. Talk to us today to find out what we can do for you.

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"Matthew Grimshaw finalized my divorce and made it easy…I can't thank him enough." – Nathaniel M.

What will happen to my San Antonio business in a divorce?

If you are a Texas business owner going through a divorce, the fate of your business depends on a variety of factors. First, it will depend on whether your business is separate or community property, which we will discuss in a moment. It also depends on the kind of business, as different rules may apply to different types of businesses:

  • Small businesses and sole proprietorships
  • Family-owned businesses
  • Jointly-owned companies
  • Large businesses and corporations
  • Franchises and chains

It is imperative you consult with an experienced attorney if you and your spouse are considering divorce to ensure you protect your business interests and assets. We can provide valuable guidance no matter the size of your business entity.

Is a business separate or community property?

Texas is a community property state, and one of the most important aspects of the divorce process is property division. A business is considered property and treated like any other asset during a divorce. Therefore, the first thing that needs determining is whether your business is separate or community property. Texas Family Code sets the rules for distribution of assets as follows:

  • Separate property is any property and assets owned by a spouse before the marriage, any property acquired by one spouse as a gift or inheritance, and any personal injury settlement recovered by a spouse during the marriage (excluding loss of earning capacity).
  • Community property is all the property and assets acquired by either spouse during the course of their marriage, excluding any separate property.

In some cases this may be clear-cut, especially if you and your spouse have a premarital or postmarital agreement in place addressing the issue already. If you do not, however, then the decision may be up to the courts or settled through alternative dispute resolution, like mediation. Our San Antonio attorneys can help with all of these.

Generally, the courts take into account when the business was created when determining whether it is separate or community property. A business you started long before you married is likely considered separate property. However, a number of factors can affect this – including your spouse’s involvement in the business, their contribution to the family while you built the business, and if any marital funds were used for the business.

What is a business valuation?

No matter your ultimate goal for your company post-divorce, a business valuation is imperative. A valuation is basically an appraisal of your business to determine its fair market value. Typically, each spouse’s attorney hires experts like forensic accountants or CPAs to conduct the valuation. Different experts can come to different conclusions, even when using the same information. This is because of a variety of data analysis techniques and approaches.

Some of these valuation approaches include:

  • Income approach. Often the most popular, the income approach is based entirely on cash flow. In the most basic terms, it is the value of the business minus things like salaries and expenses.
  • Market approach. This approach is based on the theory that the value of the business can be compared to the prices investors are currently paying for similar companies, using publicly available data.
  • Asset approach. The asset-based approach involves assigning a financial value to all of the company’s assets, based on their replacement cost. This includes intangible assets like patents or trademarks.

What are the options for dividing a business in a San Antonio divorce?

Even if your ex-spouse is awarded part of the business in the divorce, selling it off is not your only option. Consider the following options:

  • Co-ownership. This is a possibility when ex-spouses remain amicable enough to work together after a divorce. However, co-ownership requires a great deal of cooperation and trust. If this is not possible, continuing to run your business together is likely an unworkable solution.
  • Buy out your spouse’s interest. If one spouse has enough assets to buy out the other, then a buyout can be a good option. You can buy out your spouse and continue your business, or allow your spouse to buy you out and begin a new company on your own.
  • Sell the business and split the proceeds. Finally, if there is no other option, you can sell the business and divide the profits with your ex-spouse, using the proceeds to invest in a new venture or in whichever way you choose.

The attorneys at Grable Grimshaw PLLC can work with you to find a mutually beneficial solution while protecting your business interests as much as possible.

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What are the tax implications of dividing a business in a divorce?

The way you divide up your marital property can affect both your and your ex-spouse’s taxes, so it is important to get professional advice before making any financial decisions. Typically, spouses can divide up and transfer assets during a divorce under the “tax-free transfer” rule.

Internal Revenue Code Section 1041 specifies rules for transferring property between divorcing spouses. Transactions qualifying under Section 1041 are not subject to taxation when transferred from one spouse to the other, under the assumption that the property is part of your community property. Eligible assets are those considered “incident to divorce,” and non-taxable transfers can take place between one and six years after the divorce.

The legal team at Grable Grimshaw PLLC can explain these timelines and finer details, as well as craft a strategy to help get you through your divorce with professionalism and ease.

Knowledgeable San Antonio divorce attorneys for business owners

The divorce process has its challenges, and one of its biggest can be untangling property and assets. As a business owner, you want to protect your interests as much as possible. The family law attorneys at Grable Grimshaw PLLC can work with you to create an equitable property and business division agreement. Schedule a consultation with us in our San Antonio offices today to find out your options. Call 210-761-5687 or fill out our contact form. We proudly serve clients throughout South Texas.