If you own a law firm, medical practice, or any other professional business, divorce can bring a major financial concern—can your spouse claim a portion of it? Many professionals work years to build their practices, only to worry that a divorce will put their hard-earned business at risk.

In Texas, divorce laws classify most assets acquired during a marriage as community property. This means that even a business established and operated by one spouse may be subject to division. Understanding how professional assets are valued and protected can make all the difference when going through a Texas divorce.

Community Property Laws and Professional Practices

Texas follows community property laws, meaning that most assets gained during the marriage belong equally to both spouses. However, when it comes to a professional practice, things can become more complex. Here’s how it generally works:

• If the practice was started before marriage, it may be considered separate property. However, any increase in value during the marriage could be subject to division.
• If the practice was established during the marriage, it is likely to be considered community property, even if only one spouse operates it.
• Contributions from a spouse—such as administrative work, financial investments, or even indirect contributions like supporting education—can be used to claim a share in the practice.

Valuing a Professional Practice in Divorce

Determining the value of a law firm, medical practice, or other professional business is a crucial step in divorce proceedings. Several factors go into assessing its worth, including:

• Business Income – How much the practice earns annually, including revenue trends.
• Assets and Liabilities – Equipment, office space, debts, and other financial factors.
• Goodwill Value – The reputation and client relationships that contribute to the business’s success. This can be split into:
• Personal Goodwill – Tied to the individual (often not considered a divisible asset).
• Enterprise Goodwill – Tied to the business itself (often considered in asset division).
• Partnership Agreements – If the business is shared with other professionals, contracts may limit the transfer of ownership in a divorce.

A professional business valuation expert is typically needed to determine an accurate figure.

Protecting Your Practice in a Texas Divorce

If you want to prevent your spouse from taking a portion of your practice, there are several strategies to consider:

1. Prenuptial or Postnuptial Agreements – A prenuptial agreement before marriage or a postnuptial agreement during marriage can establish that the business remains separate property.
2. Partnership or Shareholder Agreements – If your business has partners, agreements can include clauses preventing ownership from being transferred in a divorce.
3. Buy-Sell Agreements – These allow a business owner to buy out a spouse’s potential interest in the business.
4. Paying Off Your Spouse’s Share – If the practice is deemed community property, a buyout may be negotiated where you compensate your spouse with other assets instead of giving them part of the business.
5. Keeping Business and Personal Finances Separate – Mixing personal and business finances can blur the line between separate and community property. Maintaining separate accounts can help establish the practice as an individual asset.

What Happens If a Spouse Has a Claim?

If a professional practice is deemed community property, it does not mean a spouse will automatically become a co-owner. Instead, Texas courts may decide on compensation through alternative means, such as:

• Granting the Business to the Owner – The spouse who operates the practice may keep it while the other spouse receives a financial settlement.
• Dividing Other Marital Assets – Instead of splitting the business, courts may award the non-owner spouse a larger share of other assets like property or savings.
• Payment Over Time – If a lump sum settlement isn’t feasible, structured payments may be arranged over time.

Courts aim for a fair distribution that minimizes business disruption while ensuring both spouses receive a just portion of the marital assets.

Why Legal Guidance is Essential

Texas divorce laws are complex, and professional practices involve significant financial stakes. Without proper planning, you could end up losing a portion of your business or facing an unfair financial settlement. Working with an experienced divorce attorney in Houston can help protect your assets and guide you through the legal process.

How to Protect Your Future

Divorce is stressful, but protecting your practice doesn’t have to be overwhelming. The right legal strategy can help ensure your business remains intact while meeting your financial obligations.

If you are facing a Texas divorce and own a professional practice, our team at Daniel Ogbeide Law is here to help. We provide experienced guidance to professionals navigating divorce, ensuring fair settlements and protecting what you’ve worked hard to build.

Contact us by calling 832-321-7005 to discuss your case and take the first step toward securing your future.