As a business owner in Collin County, look for a divorce lawyer who can read your company’s books, work with an independent valuator, keep the business operating under the court’s orders while the case is pending, and try the case in McKinney if settlement fails. Ask how they would characterize and value your interest, and check their license and any certification yourself.
This guide is for owners in Plano, Frisco, McKinney, Allen and elsewhere in the county, whether or not you hire us. It is about choosing who handles your case. For what Texas law does with a company in a divorce (character, reimbursement, the valuation standard and control), read Divorcing with a Business in Texas first, and see the mistakes business owners make in a Texas divorce for what to avoid while you decide.
Why a business changes what you need
For many owners, the company is the largest asset in the marital estate and the hardest to split. The legal questions are settled ones, but answering them takes financial records, an outside valuator and a plan for keeping the company running. The lawyer you hire has to be comfortable with all three.
What matters when you compare lawyers
Comfort with financial records
The lawyer should be at ease with business returns, profit-and-loss statements, balance sheets, owner draws, distributions and personal expenses paid by the company. For child support, Texas counts self-employment income less ordinary and necessary expenses, and the court may exclude depreciation, tax credits or other business expenses shown by the evidence to be inappropriate (Tex. Fam. Code § 154.065). The percentage guidelines apply up to $11,700 of the paying parent’s monthly net resources (Texas Attorney General). How your income is defined moves that number, and a good lawyer will test the other side’s definition line by line.
A clear view of spousal maintenance
Court-ordered maintenance in Texas is narrow, and owners often misjudge it in both directions. A court can order it only if the spouse asking will lack enough property on divorce, including separate property, to meet their minimum reasonable needs, and also fits a statutory category: a marriage of 10 years or more plus an inability to earn enough, a disabling condition, care of a disabled child of the marriage, or the other spouse’s family-violence conviction or deferred adjudication within the two years before filing (Tex. Fam. Code § 8.051). For many business owners the point that matters most is the first one: a spouse who receives enough property in the division is not eligible at all.
When maintenance is ordered, it generally lasts no more than five years for a marriage of 10 to 20 years, seven for 20 to 30, and ten for 30 or more, and the court must choose the shortest reasonable period; disability and child-care cases can run longer (Tex. Fam. Code § 8.054). The amount is capped at the lesser of $5,000 a month or 20 percent of the paying spouse’s average monthly gross income (Tex. Fam. Code § 8.055). A lawyer should be able to tell you early whether maintenance is a real issue in your case.
A working relationship with valuators
Ask which valuators and forensic accountants the lawyer has worked with, and whether they have cross-examined the other side’s. Look for independent, credentialed professionals, such as CPAs holding the AICPA’s Accredited in Business Valuation or Certified in Financial Forensics credential. Your lawyer should be able to test a report’s valuation date, normalization adjustments, discounts and treatment of goodwill, since the goodwill that depends on you personally is where two valuations most often part ways. Our page on business owner interest valuation and division in divorce covers the basics.
A plan for running the company during the case
A careful lawyer raises payroll, vendor payments, credit lines, distributions and your household budget early, by agreement or by temporary orders, and reads the county’s standing order with you the day the case is filed. Customer, pricing and payroll records will change hands in discovery, so ask for confidentiality terms first; the 366th District Court, for example, posts a confidentiality (protective) order form on its court documents page.
Preparation that holds up at mediation
The valuation, tax and cash-flow work has to be finished before mediation day, because a signed mediated settlement agreement is binding and the deal you sign there is usually the deal you live with. Ask how the lawyer models the after-tax value of a buyout and when they bring your CPA in.
Questions to ask at the first meeting
- How would you characterize my company, and what records do you need to test that?
- Which valuators have you worked with, and when would you recommend a joint valuator instead of our own?
- How will the company pay its bills, and how will I pay mine, while the case is pending?
- What income figure is the other side likely to argue for, and how would you answer it?
- Is spousal maintenance a realistic issue in my case?
- How will you protect customer, pricing and payroll information?
- Who will work on my file day to day, how do you bill, and what should I budget for valuation work?
- If we settle, how would you structure a buyout, including payment terms, security and default provisions?
- If we cannot settle, are you prepared to try this case in a Collin County district court?
Red flags
- A predicted number or result at the first meeting. No one can responsibly value your company or forecast a ruling before seeing the records.
- Advice to hide or move money. Deferring invoices, prepaying expenses or paying sham loans to friends can be treated as fraud on the community, and the court can award the wronged spouse a money judgment (Tex. Fam. Code § 7.009).
- No questions about your documents. A lawyer who does not ask for the company agreement, buy-sell terms, tax returns and financial statements is not yet thinking about your case.
- A plan to use your company’s CPA as the valuator, or vague answers about fees and staffing.
- Credentials you have not checked. Confirm license status and any public discipline in the State Bar of Texas directory, and confirm any board certification in the Texas Board of Legal Specialization directory.
What good looks like
In the first weeks, expect a document list (business and personal returns, financial statements, the company agreement and buy-sell terms, bank, loan and payroll records), a working theory on separate and community property with a tracing plan, a recommendation on valuators, proposed terms for running the company during the case, and a budget that includes the valuator.
Before mediation, expect the valuation reports reviewed line by line, a settlement model showing the after-tax value of each proposed split, and buyout terms with real security. If the case is headed for trial in McKinney, your valuator and exhibits should be ready well before the setting, not assembled the week before.
Where Scroggins Law Group fits
Scroggins Law Group practices family law only, and its clients include business owners and executives. Mark L. Scroggins is Board Certified in Family Law by the Texas Board of Legal Specialization; his work often involves high-stakes litigation over complex property, and his bio notes his background in family law and business litigation (attorney profile). Interview him with the questions above at our Plano office, 5851 Legacy Circle, Suite 600, or call 214-469-3100. If the estate also holds real estate, investment accounts or deferred compensation, see High-Net-Worth Divorce in Plano and Collin County.
FAQ
Can my spouse end up owning part of my company?
It can happen, but it is often avoided. In an LLC, a spouse who receives a membership interest in the divorce is an assignee, not a member (Tex. Bus. Orgs. Code § 101.1115). Your company agreement and any buy-sell terms shape the options, so bring them to your first meeting.
Should we use one joint valuator?
Sometimes. A joint valuator can save money when both spouses trust the books. When one spouse ran the company and the other did not, the spouse who was not involved often wants an independent review, and you may want a consulting valuator to check a joint report.
How long does a business-owner divorce take in Collin County?
With a company in the estate, the valuation schedule usually sets the pace: gathering records, the valuator’s work, any rebuttal report, then mediation. Ask for a realistic timeline at the first meeting, and see our page on high-net-worth divorce cost in Plano for how time drives the budget.
My business existed before we married. Is it safe?
The interest you owned before marriage can be your separate property, but you must prove it, and the community may still claim reimbursement for effort that grew it. If you are planning a future marriage, see Prenuptial Agreements in Texas.
This page is general information, not legal advice, and reading it does not create an attorney-client relationship.