Dividing Jointly-Owned Property After Divorce in TX
Some couples will approach their divorce with limited assets and an easier time reaching a settlement. If the parties have only a joint bank account, some personal property, and perhaps even a home, it might be easier to reach a settlement or at least identify the points of contention. Parties with more complex assets, however, may have to undergo additional processes in order to value, apportion, and divide such assets. Division of jointly-owned property is especially important in high net-worth divorces. Divorcing parties with significant assets may have one or more closely-held businesses or ownership interests in larger corporations; dividing these assets can affect the efficient administration of the business if done inefficiently. Below, we discuss a few types of jointly-owned property likely to arise during or after a divorce.
Real Estate
Jointly-owned real estate is a common point of contention in divorce. Many divorcing couples must account for the family home, if not additional rental properties and other real estate. If the property is jointly-owned or otherwise qualifies as community property, the parties have a few options for distribution upon divorce. The parties can agree to sell the property and divide the proceeds, they can agree to continue jointly own the property following divorce (which may be ill-advised, depending on their relationship), or one spouse can take title in exchange for cash or other community assets of equivalent value.
Parties who continue to have joint ownership can seek to partition the property after divorce. Different legal actions apply depending upon whether the joint ownership was explicitly decided upon in a settlement and court order or whether the property was simply left unaccounted for in the divorce. Property that was left unaccounted for in the divorce can be partitioned in a “fair and just manner” within a certain period of time after divorce, like other community property. Property that was deliberately left as jointly-owned following a divorce can be split subject to a partition action under the Property Code, like other property jointly owned by business partners or other associates. There are time limits for filing actions concerning undivided property following divorce, so it’s important to consult with your family law attorney as soon as possible to discuss any concerns you may have with property that remains jointly owned.
Jointly-Owned Businesses
Business ownership interests count as property for the purposes of divorce. Depending upon when the business was started or the ownership interest acquired as well as the involvement of each spouse during the marriage, a business may qualify as community property. If the court and/or the spouses determine that a business–be it a family business, a closely held corporation, an S-Corp, or other business entity–is a piece of community property, the parties and court will have to determine how the business ownership interests should be split.
Divorcing parties generally have three options for resolving the distribution of jointly-owned businesses: (1) continue to own the business together and jointly operate the enterprise; (2) have one party “buy out” the other party’s ownership interests; or (3) sell the property and divide the proceeds between the parties appropriately. The best option for your family business depends upon the nature of the business as well as the nature of your relationship with your former spouse.
Remaining co-owners can be a struggle if personal issues will interrupt the efficient operation of a business. If the business was primarily run by one spouse, it makes sense to have that spouse simply buy the other spouse’s ownership share. Effecting a buyout also requires establishing the value of the business, which can be a complex process in and of itself. If the business can easily be liquidated and re-started under a new name with new management, selling the business and splitting the proceeds might be the best option. Discuss your business interests with your family law attorney to determine which approach makes the most sense to you.
Call a Seasoned Divorce Lawyer
If you are dealing with property division during or after divorce, you need assistance from a savvy Texas property division attorney. Call our team of divorce and equitable division attorneys to discuss your Texas divorce and property division matter.