Many of the clients who come to us at O’Neil Wysocki P.C. for divorce assistance are members of the Dallas business community who own and operate businesses that they founded or inherited from their families. The fact that either or both of the spouses in a divorce own a business can cause the case to become far more complex and involved than it might otherwise be.
Parties to a high net worth divorce are more likely to get involved in heated litigation that has the potential to drag on for months or even years and to leave both sides drained financially. Let the team of Dallas divorce lawyers at our firm guide you through this process and work to safeguard your stake in the business.
Under Texas state law, all of the property owned by the spouses in a divorce will be categorized as being either community property, part of the marital estate, or as separate property owned by only one of the spouses. If the business was started prior to the marriage, it will be considered to be the separate property of the business owner, whereas it would be community property if it were founded during the marriage.
While this distinction may seem straightforward, in practice it is anything but. Even if the business is a fundamentally separate property founded prior to the marriage, the amount by which it increased in value during the marriage is generally treated as community property.
The first step in a divorce involving a business owner is to discern whether or not the business, or part of the value thereof, is to be considered community property. Next, it is necessary to perform an exhaustive business valuation to determine how much the business asset is worth. This normally requires the services of a certified public accountant with experience in divorces involving businesses.
Another aspect of business valuation is the goodwill associated with the business. In this context, goodwill is essentially the total value of the business, minus the value of the assets. How much is the reputation of the business worth on the market? Personal goodwill associated with the business owner or principal is generally considered separate property, whereas enterprise goodwill, the value of the business' name and reputation in the community, is considered to be community property.
Divorces involving businesses and other large assets can often be settled quickly and efficiently through out-of-court negotiations and alternative dispute strategies such as mediation. If, however, you and your spouse are not able to achieve a property settlement out of court, one of our family law attorneys can represent you before the judge in a trial to determine who will receive the assets.
In some cases, the divorce may end with the business owner paying a settlement to the other spouse for satisfaction of his or her stake in the business. In other cases, the other spouse may be denied any type of payment or continuing interest. Contact O’Neil Wysocki P.C. now for to schedule an initial consultation to discuss your concerns and learn about your options.
O’Neil Wysocki P.C. can be reached by phone at (972) 852-8000