Divorce is not only emotionally taxing but also financially intricate, especially when it comes to dividing marital assets. In Texas, the process of splitting money and property is guided by community property laws, which will, along with the spouses or judge, dictate the final settlement. Understanding how money is divided during a divorce in Texas is crucial for both spouses to ensure a fair and equitable outcome. It is best to enlist the skills and knowledge of a Frisco high net worth divorce attorney to help ensure your rights are protected.

Community Property Laws in Texas

Texas is one of the few states in the United States that follows the community property system. Under this system, any assets acquired during the marriage are generally considered community property, belonging equally to both spouses. This includes income, real estate, investments, and other property obtained during the marriage. Community property laws work the same in a high net worth divorce.

Separate Property

However, not all assets fall under the umbrella of community property. Separate property is assets owned by one spouse individually before the marriage or acquired by gift, inheritance, or personal injury settlement during the marriage. These assets are generally not legally subject to division during divorce.

As a community property state, marital property is divided evenly in a Texas divorce. Does the same rule apply to your business? Our attorneys answer this question by exploring the implications of the community property rule. We also share strategies you can adopt during property division to reach a positive and profitable outcome after a divorce. 

Understanding the Implications of Texas as a Community State  

Texas divorce laws characterize assets and debts accumulated during marriage as marital property. According to the community property rule, these assets and financial obligations are split equally between divorcing spouses. 

Your business does fall into this category if you started the venture after marriage. Or if your spouse became a stakeholder, investor, or business partner in the company after marriage. 

The number of people over 50 getting a divorce is growing. Unfortunately, divorce tends to have a more drastic financial impact on women than it does on men and inflation is only making matters worse. That is why it is important not to rush to get it over with but to fight for what you believe you will need long-term.

Financial Impact of a Gray Divorce

After a gray divorce, women are more likely to live below the federal poverty line compared to men. Women may be at a disadvantage for some of the following reasons: 

• Women settle for lower-paying jobs that provide more flexibility so that they can take care of their children or their aging parents

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Reaching the conclusion that a marriage is beyond saying is an emotionally-charged realization for any couple. However, spouses who own a family business such as a restaurant have an extra layer of difficulty. If you or your spouse own a restaurant or other business, you may be unsure of what will happen if you divorce. Will we split ownership of the business 50/50? Should we sell the business? Situations like this are difficult to figure out – legally, financially, and personally. Consequently, it is highly recommended that business owners seeking a divorce work with a skilled attorney.

Who Has a Right to the Business?

As with any property division concern, divorcing spouses may be able to negotiate an agreement about how to divide assets. However, if the issue is litigated, it is important to understand how Texas property division laws apply to family businesses. Texas courts follow “community property” rules when dividing assets in a divorce. Property that a spouse owned before getting married is separate property. Marital property, on the other hand, is jointly held by both spouses. Most property that a spouse acquires during the marriage is considered marital property. However, the identity of an asset as marital or separate can change. For example, a business that a spouse owned before getting married may become marital property if the other spouse spent time, money, or resources growing the business.

Valuing Your Family Restaurant in a Divorce  

Before you can have a meaningful conversation about what to do with a family restaurant during divorce, you need to know the restaurant’s value. A financial professional experienced in valuing family businesses can determine the best method for reaching an accurate value. Once you know what the restaurant is worth, you can decide how to proceed.