Divorce and Ownership in Limited Liability Companies (LLCs)

Divorce and ownership in limited liability companies (LLCs) often intersect in ways that significantly complicate the dissolution of marriage. For many professionals and entrepreneurs in Texas, an LLC represents not only a financial investment but also a livelihood, a source of income, and a reflection of years of hard work. When a marriage ends, the question of how business ownership is characterized, valued, and divided under Texas community property law becomes a crucial part of the case. If you or your spouse hold an interest in an LLC, it is essential to understand how Texas law treats these interests and you should meet with an attorney as soon as possible. At McClure Law Group, our skilled Dallas divorce attorneys are well-versed in handling divorce and ownership in limited liability companies (LLCs), and if you engage our services, we will take the steps necessary to help you protect your financial and business interests during this challenging time.

In Texas, determining whether an ownership interest in an LLC is community or separate property is a critical first step in divorce proceedings. Because Texas is a community property state, most assets acquired during marriage, including business interests, are presumed to belong to both spouses. However, ownership in an LLC may be classified as separate property if the interest was acquired before marriage, or through inheritance or gift. This characterization affects not only division but also the management and future operation of the business.

Disputes often arise when marital resources have been used to grow or maintain an LLC that one spouse claims as separate property. For example, if community funds were invested into the company, or if both spouses contributed to its success, the non-owning spouse may have a reimbursement claim. Conversely, if the LLC’s growth occurred solely through passive market forces, that appreciation might remain separate. Divorce and ownership in limited liability companies (LLCs) thus require a nuanced understanding of property law, tracing principles, and financial documentation to establish how funds flowed in and out of the business during the marriage.

Once ownership characterization is established, the next step is determining the value of the LLC interest. Unlike publicly traded companies, LLCs are privately held, and their valuation can be highly subjective. Texas courts often rely on financial experts and forensic accountants to provide fair market value assessments, taking into account the company’s income, assets, liabilities, and goodwill. These appraisals can differ substantially depending on whether a market, income, or asset-based approach is used.

Complicating matters further, LLC operating agreements frequently contain clauses restricting ownership transfer, limiting access to financial records, or requiring consent from other members before shares can be assigned. These provisions can affect not only the valuation process but also what portion of the business can actually be divided. In some cases, courts may award the non-owning spouse an offset in other marital assets rather than forcing a sale or partition of the business. In others, creative settlements are structured to preserve the integrity of the company while ensuring equitable distribution of the marital estate. Because divorce and ownership in limited liability companies (LLCs) are both legal and financial matters, successful outcomes demand a comprehensive strategy.

When one or both spouses are active participants in an LLC, control and management become additional points of contention. An LLC’s operating agreement may dictate how managerial rights are exercised, who can make financial decisions, and whether members can withdraw or transfer their interests. If both spouses are co-owners, divorce can strain not only their personal relationship but also the stability of the business itself. Texas courts typically seek to minimize disruption to ongoing operations, but interim orders may be necessary to prevent mismanagement or dissipation of assets during litigation.

In Texas, the division of marital property must be “just and right,” which does not necessarily mean equal. Courts evaluate a range of factors, including each spouse’s earning capacity, contributions to the marriage, and the economic realities of the business itself. For example, if an LLC represents a family’s primary income source, selling the company may not be practical or beneficial to either party. Instead, one spouse may retain full control of the business while compensating the other with a share of other marital assets, cash payments, or structured settlements over time.

Divorce involving business ownership requires a level of precision and experience that few family law firms can provide. If you are facing divorce and ownership in limited liability companies (LLCs) is part of your situation, it is crucial to have counsel who understands both the emotional and financial dimensions of your case. At McClure Law Group, our seasoned Dallas divorce attorneys have extensive experience representing business owners, entrepreneurs, and professionals in high-asset divorces throughout Texas, and if you hire us we will combine assertive advocacy with strategic negotiation to protect your interests and achieve the best possible outcome. Our main office is located in Dallas, and we have a Collin County office in Plano where we meet clients by appointment. We represent individuals in Garland, Fort Worth, McKinney, Richardson, Frisco, Irving, and Rockwall, as well as throughout Dallas, Collin, Grayson, Tarrant, Rockwall, and Denton Counties. Contact McClure Law Group at 214.692.8200 or complete our online form to schedule a confidential consultation with one of our experienced attorneys.