By: Leslie Barrows
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Dividing up Businesses During Divorce and COVID-19
Divorce and Property Division During COVID-19
Divorce is challenging and it is a significant life event, especially when there are businesses involved and property division issues. Even in great economic conditions, there are disagreements over who owns what, what it is worth, and how it should best be distributed among the parties in the divorce.
Texas is a community property state and the Texas Family Code divides property acquired during the marriage based on what is “right and just,” which can be 50/50 or can be otherwise depending on the facts and circumstances. Separate property that remains legally classified and identifiable as separate, is not considered for division in the divorce. The more businesses and properties that are involved, the more opportunities there are for unresolved conflict. Especially in high-stakes divorce with business interests, it is important to use an experienced divorce attorney and law firm that knows how to create a winning strategy to meet your family’s needs.
Attorney Leslie Barrows and her team at the Barrows Firm in Southlake will ask all the right questions in your initial consultation to advise how to proceed with divorce during the COVID-19 Coronavirus outbreak. Call (817) 481-1583.
Dividing Business Assets in a Divorce
Are there any existing agreements that direct what happens to property and businesses in a divorce? A premarital agreement, for example, can specify that a business asset remains the separate value of one of the spouses. One of the parties in the divorce may also have independent business contracts with other individuals and organizations that can play a role in the divorce process of property and business asset division.
Determining who has the legal right to what assets and business interests is one step. Another issue is how much money the assets and property are worth. By agreement between the parties or by order of the Court, the marital property and any businesses will be distributed between the spouses. One might accept a larger share of an investment account and waive ownership in a business, for example. There are many options and every divorce is different.
Learn more, see our article, Prenups, and Premarital Agreements in Texas.
Valuation of Property and Business Assets
Any property that is subject to division in a divorce must be valued. This means that marital homes, vacation properties, investment properties, and shares in a business and business assets must be valued. A property and business valuation expert can offer their report and testimony if necessary when the parties do not otherwise agree to property amounts.
The discovery process in a divorce involves the exchange of information between the divorcing spouses. The documents and information help the attorneys and their clients understand where the money and property are and who else may be involved with ownership interests.
When assets and property are identified, the valuation process can take place. The more complicated the asset or business interest is, the more work it can take to get a proper valuation. If there is a conflict between the parties in the valuation process, it might be necessary to go to court when an agreement on fair market values cannot be reached.
Getting into Court on Property and Business Division in COVID-19 Divorce
Texas courts are operating on different plans during the COVID-19 Coronavirus outbreak. What is happening in Tarrant County district courts may be different from Denton County, for example. In many courts, only essential matters are being conducted in open courts and most hearings and trials are being done remotely using Zoom.
If there are disputes over property and business values, contracts, and interests, your attorney may need to have a hearing with the Judge. So many families are waiting for hearings that have been continued and postponed due to the stress on the Courts and already busy dockets. Your divorce attorney can talk to you about various options in your divorce during COVID-19. It might make sense to handle some parts of the divorce now, and others later.
Please Also See our Article: Estate Planning and Updates During COVID19 Coronavirus.
How the COVID-19 Outbreak Affects Property Division
Uncertainty is a constant right now and changes happen quickly during COVID-19. Determining the fair market value of property and business interests is challenging during a pandemic. It is difficult, even for the experts, to forecast the value of property and business assets during 2020. Applying these challenges to a divorce with business interests, there could be cash flow issues, assets might need to be sold to sustain operations, and third-party contract obligations could cause temporary difficulties.
Conflict between spouses in a divorce can be resolved by agreement or by Order of the Court. During the COVID-19 outbreak, one party to the divorce might prefer to postpone certain elements of property and business division. The other party, however, may wish to proceed with the case despite various challenges. With uncertainty, postponing property and business division could work against the party seeking to wait for fair market values to return to normal and lose more money for both parties.