That is why the mere thought that your spouse could get half of your business when you file for divorce can be very unpleasant. But is there anything you can do to protect your business from your spouse when filing for divorce?
Fortunately, it is possible to take certain steps to protect your business in the event of a divorce. Contact a Georgetown divorce lawyer to help you protect your business interests and legal rights.
Is Your Business Community Property vs. Separate Property?
In order to determine how your business will be split during your divorce, it is critical to understand the property distribution laws in Texas. Unlike most other states, Texas is a community property state.
Under the doctrine of community property, divorcing spouses must split any assets they acquired during the marriage equally (50/50). However, any assets spouses owned before the marriage or after their legal separation is not considered community property.
In addition, any gifts and inheritance either spouse receives during the marriage are classified as separate property under the community property law in Texas.
Your business may be considered either community or separate property in the event of a divorce:
Separate property. If you created and ran your business before the marriage, your spouse will most likely not be able to get half of it.
Community property. If you did not own your business before the marriage, it would most likely be classified as community property. If you owned your business before the marriage, but your spouse contributed to the building or running of your business, he or she would most likely be entitled to up to 50% of your business in a divorce.
Speak with an attorney to determine if your business is community or separate property in your particular situation.
Things to Consider When Dividing Your Business in a Divorce
Ideally, you and your spouse should reach an agreement regarding the division of your business and other assets outside of court. If your attorney determines that your business is a community property that must be divided in a divorce, ask yourself the following questions to determine the most appropriate resolution:
Has your spouse contributed to the business in any way?
Would the business still be profitable if you changed its structure?
Would it be possible to continue operating your business after the divorce?
Is there a possibility of selling the business to divide the proceeds?
Is it possible to give up your other assets in exchange for your spouse’s share in the business?
Does your prenuptial or postnuptial agreement address the ownership of your business?
Are any other people involved in management or ownership of the business?
Is there a buy-sell agreement that requires you to sell your spouse’s interest in the business to the other owners?
Would that be possible to buy out your spouse’s interest in the business?
Is it possible to resolve your dispute amicably with the help of an attorney?
It Is Best to Split Up the Business Amicably
If possible, you should try your best to divide your business amicably. Reaching an agreement may be difficult if you are not represented by an experienced attorney.
Your attorney can help you find a mutually beneficial resolution to split your business upon a divorce. If you cannot come to an agreement, your lawyer may offer you to try mediation.
Splitting up your business amicably allows you to find creative solutions and save a lot of money on court costs and litigation.
How to Protect My Business in a Texas Divorce?
There are certain steps you can take before and during the marriage to protect your business in the event of a divorce.
Create a Prenuptial or Postnuptial Agreement
Setting up a prenuptial or postnuptial agreement can help you and your spouse distinguish between separate and community property to protect assets in a divorce.
It is recommended to seek the legal counsel of an experienced attorney to help you draft a valid and enforceable prenup or postnup in order to protect your business and other assets.
Beware of Your Spouse’s Contributions
As mentioned earlier, your spouse is more likely to get half of your business if he or she contributes to your business during the marriage, even if you owned your business before the marriage.
Unless you absolutely have to, try your best to keep your spouse out of business operations if you want to protect your business in the event of a divorce.
Consider Giving Up Other Assets
When a business is considered community property and is subject to division, one of the ways to protect your business is to offer other assets to your spouse in exchange for their share in the business. Alternatively, you can simply buy out their interest if you can afford it.
Contact a Divorce Lawyer
If you truly care about protecting your business from your spouse in a Texas divorce, it is advisable to contact a divorce lawyer. The cost of hiring a divorce lawyer is nothing compared to the risk of losing half of your business to your spouse.
Since a business can be one of the most valuable assets in a divorce, many divorcing couples are unable to reach an agreement regarding the division of the business. An experienced and skilled lawyer can help you resolve your dispute and come to a mutually beneficial agreement.
Schedule a Free Consultation with a Georgetown Divorce Lawyer
At The Law Office of Brett H. Pritchard, our knowledgeable divorce lawyers have decades of experience representing business owners who wish to protect their companies and other assets in a divorce. Our divorce attorneys can help you understand all of your options to ensure that your spouse does not get half of your business.You can receive a free consultation with our Georgetown divorce lawyers by contacting us online calling 254-501-4040.