Can Divorce Mediation Help Us Divide Our Texas Family Business?

 Posted on April 26, 2022 in Property Division

Divorce can be tough on a family’s finances. Child support, spousal support, and asset division are all difficult to negotiate, but when a small family business is involved, spouses may become extremely protective about dividing their hard-earned success. Fortunately, divorce mediation can help spouses make all necessary financial decisions during divorce - even the most difficult ones, like what to do with a small business. Here are three common questions about handling a family business during divorce. 

Is a Business Community Property? 

If a business is not community property, it will not be divided in a divorce - hence, determining whether a business belongs exclusively to one spouse is the first step in managing a family business. Businesses that are protected by a prenuptial agreement will likely remain the separate property of one spouse, as will some of all or a business that was up and running before a spouse got married. While a mediator cannot make separate property become marital property and vice versa, he or she can help spouses agree about how much of a business is community property if the business was started prior to the marriage. 

How Much is the Business Worth? 

The next step in managing a business is determining its worth. There are several ways to do this, and the best way will depend on the type of business and the goals of the spouses. A mediator can help spouses agree about a valuation method to use and how to manage conflict if spouses disagree about the value of the business. Valuing a business can be complicated, so mediators can help spouses work with financial professionals to complete a mutually acceptable valuation assessment. 

How Can a Business’s Value Be Divided? 

Deciding what to do with a business’s community value is often the hardest part of the process. There are essentially three options for handling this step: 

• One spouse “buys out” the other spouse’s value, giving them other marital assets in exchange for their portion of business ownership
• Spouses sell the business and divide the proceeds 
• Spouses agree to continue working together and retain their ownership in the company 

The most appropriate strategy will depend on several factors, including both spouses’ financial priorities, how well they get along, and whether either spouse is interested in continuing to run the business. Mediation can help spouses every step of the way, so the entire asset division process is peaceable and fair. 

Schedule a Free Consultation with a Plano, TX Family Business Divorce Mediator

At Divorce Mediation Centers of America, our Plano, TX divorce mediation attorney can help you value and negotiate your business so you can preserve your interests while ensuring a fair marital asset division. Schedule a complimentary consultation by calling our offices now at 469-406-4320. 

Source: 

https://statutes.capitol.texas.gov/Docs/FA/htm/FA.7.htm