Divorce is never easy, but here's how to navigate it with your business in mind. Photo via Pexels

We all hoped that, once the pandemic had waned, we would return to a more normal, predictable economy, but it seems that we are confronted now with even more unpredictability in what economists have dubbed the “uncertainty economy.” Very few people are able to choose the best time to divorce on the basis of finances, but the current environment can make evaluating the worth of stock options, a closely held business or even real estate highly challenging.

For one thing, the pandemic itself lingers. Some businesses—bicycle manufacturers and bicycle shops, for instance—experienced boom times during the pandemic. Other businesses—restaurants and businesses at tourist locations, for instance—suffered greatly, limped along, or even closed for good. Now, instead of settling into a steady hum again, our economy is coping with inflation, the rising cost of labor, supply chain tangles, and the ripple effects of the war in Ukraine and sanctions against Russia. The situation is still fluid. What works today may not work well tomorrow. What doesn’t look promising today may be much more successful tomorrow.

In a divorce case in which significant financial assets are involved that are community property, a family lawyer will bring in a trusted professional business or property evaluator—whatever is appropriate for the particular situation. Evaluating a closely held business is often the most difficult issue—more difficult than, say, dividing the value of real estate or stock in a publicly traded company. Three different methods can be applied to a business valuation: the market approach, the income approach, and the asset approach. The business evaluator will judge which to use, singly or in combination.

Much will depend on the ownership agreement as expressed in formation documents, whether the owners be investors, business partners or family members. These documents generally provide in some way for what will occur in the case of a divorce or a death. Generally, co-owners do not want to have to deal with an inexperienced ex-spouse or widow/widower who abruptly becomes part-owner of the business or practice (in the case of a doctor or lawyer in a partnership). The spouse who is in the business also has to consider tax issues and his or her fiduciary duty to other owners. And courts are not allowed to simply give corporate assets or debts to one party or the other in a divorce.

Generally the spouse involved in the closely held business will have three choices available: continue to own the business with the ex-spouse (maybe they already work together and have a decent working relationship), sell the business and divide the profits, or offset the value of the business ownership with other property if other assets are available. In Texas, “personal goodwill” as part of a business is not community property. It attaches to the person who created it. But the business may have “enterprise goodwill”--the value of the business apart from the individual owner--which may be community property.

None of this addresses the issue of the fluidity in the current economy. Divorce agreements can allow for that in the form of contingency agreements. For example, a business owner may be dealing with a specific potential liability. The divorce agreement may provide that, for a given period of time, the business owner is allowed to set aside a certain amount of money to address the liability if it arises. If it does not arise, after a certain period of time, the money will be divided between the two former spouses. Or let’s say a business asset with limited liability or future involvement that is part of community property may be sold in the future. A divorce agreement can provide that, if the asset is sold, the profits will be shared. Clawback provisions can be included, as well, to provide for future adjustments. This will require extraordinary drafting skill.

There is another option as well and that is to wait for more settled times. But the two spouses may have radically opposed views as to the “best” time for the divorce. The spouse who earns less may want to divorce when community property values are at their highest; the other spouse will want to split when community property values are at their lowest. In either case, they would do well to consult experts in family law and business valuation experts before deciding on when to set a divorce in motion.

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Susan Myres is a Houston-based, board-certified family law attorney at Myres & Associates and has over 35 years of experience.

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2 Houston space tech cos. celebrate major tech milestones

big wins

Two Houston aerospace companies — Intuitive Machines and Venus Aerospace — have reached testing milestones for equipment they’re developing.

Intuitive Machines recently completed the first round of “human in the loop” testing for its Moon RACER (Reusable Autonomous Crewed Exploration Rover) lunar terrain vehicle. The company conducted the test at NASA’s Johnson Space Center.

RACER is one of three lunar terrain vehicles being considered by NASA for the space agency’s Artemis initiative, which will send astronauts to the moon.

NASA says human-in-the-loop testing can reveal design flaws and technical problems, and can lead to cost-efficient improvements. In addition, it can elevate the design process from 2D to 3D modeling.

Intuitive Machines says the testing “proved invaluable.” NASA astronauts served as test subjects who provided feedback about the Moon RACER’s functionality.

The Moon RACER, featuring a rechargeable electric battery and a robotic arm, will be able to accommodate two astronauts and more than 880 pounds of cargo. It’s being designed to pull a trailer loaded with more than 1,760 pounds of cargo.

Another Houston company, Venus Aerospace, recently achieved ignition of its VDR2 rocket engine. The engine, being developed in tandem with Ohio-based Velontra — which aims to produce hypersonic planes — combines the functions of a rotating detonation rocket engine with those of a ramjet.

A rotating detonation rocket engine, which isn’t equipped with moving parts, rapidly burns fuel via a supersonic detonation wave, according to the Air Force Research Laboratory. In turn, the engine delivers high performance in a small volume, the lab says. This savings in volume can offer range, speed, and affordability benefits compared with ramjets, rockets, and gas turbines.

A ramjet is a type of “air breathing” jet engine that does not include a rotary engine, according to the SKYbrary electronic database. Instead, it uses the forward motion of the engine to compress incoming air.

A ramjet can’t function at zero airspeed, so it can’t power an aircraft during all phases of flight, according to SKYbrary. Therefore, it must be paired with another kind of propulsion, such as a rotating detonation rocket engine, to enable acceleration at a speed where the ramjet can produce thrust.

“With this successful test and ignition, Venus Aerospace has demonstrated the exceptional ability to start a [ramjet] at takeoff speed, which is revolutionary,” the company says.

Venus Aerospace plans further testing of its engine in 2025.

Venus Aerospace, recently achieved ignition of its VDR2 rocket engine. Photo courtesy of Venus Aerospace

METRO rolls out electric shuttles for downtown Houston commuters

on a roll

The innovative METRO microtransit program will be expanding to the downtown area, the Metropolitan Transit Authority of Harris County announced on Monday.

“Microtransit is a proven solution to get more people where they need to go safely and efficiently,” Houston Mayor John Whitmire said in a statement. “Connected communities are safer communities, and bringing microtransit to Houston builds on my promise for smart, fiscally-sound infrastructure growth.”

The program started in June 2023 when the city’s nonprofit Evolve Houston partnered with the for-profit Ryde company to offer free shuttle service to residents of Second and Third Ward. The shuttles are all-electric and take riders to bus stops, medical buildings, and grocery stores. Essentially, it works as a traditional ride-share service but focuses on multiple passengers in areas where bus access may involve hazards or other obstacles. Riders access the system through the Ride Circuit app.

So far, the microtransit system has made a positive impact in the wards according to METRO. This has led to the current expansion into the downtown area. The system is not designed to replace the standard bus service, but to help riders navigate to it through areas where bus service is more difficult.

“Integrating microtransit into METRO’s public transit system demonstrates a commitment to finding innovative solutions that meet our customers where they are,” said METRO Board Chair Elizabeth Gonzalez Brock. “This on-demand service provides a flexible, easier way to reach METRO buses and rail lines and will grow ridership by solving the first- and last-mile challenges that have hindered people’s ability to choose METRO.”

The City of Houston approved a renewal of the microtransit program in July, authorizing Evolve Houston to spend $1.3 million on it. Some, like council member Letitia Plummer, have questioned whether microtransit is really the future for METRO as the service cuts lines such as the University Corridor.

However, the microtransit system serves clear and longstanding needs in Houston. Getting to and from bus stops in the city with its long blocks, spread-out communities, and fickle pedestrian ways can be difficult, especially for poor or disabled riders. While the bus and rail work fine for longer distances, shorter ones can be underserved.

Even in places like downtown where stops are plentiful, movement between them can still involve walks of a mile or more, and may not serve for short trips.

“Our microtransit service is a game-changer for connecting people, and we are thrilled to launch it in downtown Houston,” said Evolve executive director Casey Brown. “The all-electric, on-demand service complements METRO’s existing fixed-route systems while offering a new solution for short trips. This launch marks an important milestone for our service, and we look forward to introducing additional zones in the new year — improving access to public transit and local destinations.”

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This article originally ran on CultureMap.