Divorce affects all aspects of your life, with financial elements taking the forefront. If you own a business in Texas, you need to take steps to ensure that you suffer the least amount of economic damage before you sign the final divorce papers.
What is at stake in your business?
Texas is a community property state, meaning your spouse might be awarded half of the business, depending upon when it was started. For some aspects, this designation will make dividing your assets in divorce easier as you may not undergo extensive negotiations during your divorce. However, if your spouse is involved in the company’s daily operations or is a significant shareholder, things can become complicated.
The best thing to do is to protect your business in advance. Consider these options:
- Develop and sign a prenuptial or postnuptial agreement outlining the business terms if you split up.
- Keep your marital and business assets separate with different accounts
- Put your business into a trust and name a trustee, so you don’t technically own the entity.
- Take out an insurance policy to cover asset division if you don’t have enough money to give your spouse in a settlement.
Many people don’t think about their businesses when they get married and must face the consequences when divorce is on the table. Nevertheless, you can still take steps to protect yourself.
Maintaining a strong business
Finding a way to protect your business assets in divorce is not impossible. Finding creative solutions is essential if you want to retain ownership. Options like selling other assets that aren’t as crucial to you or making payments over time are viable.
Weighing the different options you have is also necessary. Business owners going through a divorce shouldn’t necessarily take the first draft agreement. Negotiations over time and even mediation can help you and your spouse reach an acceptable settlement.