Everyone knows that divorce causes a lot of changes. From a financial aspect, it could mean losing one of the household incomes you enjoyed while you were married. Still, you can expect to walk away with a significant share of the wealth you and your ex accrued during your marriage.
Unlike most states, Texas practices community property division in divorce. In community property states, a divorcing couple must split up all assets deemed “community property” 50-50. Community property includes most things you and your ex acquired during your marriage, such as:
- Money in bank accounts
- Retirement savings
- An ownership stake in a business
- The family home
- Personal property and collections like furniture and artwork
One of the key steps in the property division process is determining which assets are community property and which are “separate property,” or items not included in the community property pile. Separate property includes most assets that one spouse owned prior to the marriage. Spouses do not always agree whether an asset is community or separate property.
Keep in mind that a separate asset can turn into a community asset if it becomes commingled with the other spouse’s property. For example, say you and your spouse took the money you each had in the bank and combined it into a shared savings account. That money would most likely be considered community property.
How much is that small business really worth?
Next comes community property valuation. Knowing exactly how much a share of a small business or similar asset is worth is important, especially if one of you is buying out the other spouse. This typically involves hiring experts to do valuations, then negotiating a settlement that is somewhere between the competing dollar figures.