No one knows what the future holds and business owners must take precautions to plan and prepare for even unlikely events that could affect the company in the future. If you are owner or part owner of a business and you are married, have you considered how a divorce could affect your business? The business you’ve worked so hard to build? Consider the following strategies to protect your business before trouble occurs.
A pre-nuptial agreement is a document that classifies pre-marital assets. This is especially important in Texas, which is one (1) of only nine (9) states that recognize community property. Community property means that all earnings and assets gained during the marriage are divided equally between both spouses. Classifying your business as separate, not marital, property means that a divorce won’t require you to surrender half of its value.
They’re Not Just for Spouses
If your business partner is entering into marriage, it’s not uncommon―or uncalled for―to ask them to enter into a prenuptial agreement. Such an agreement, which would need to be signed by the partner’s spouse, would waive the spouse’s interests in the business should a divorce occur.
What if I’m Already Married and There’s No Pre-Nuptial Agreement?
While they’re rarely mentioned, there is such a thing as a post-nuptial agreement, which means it’s signed after the marriage has occurred. However, some judges view them with skepticism unless they are signed at least seven (7) years prior to the divorce. If a post-nuptial agreement is signed less than seven (7) years before the divorce, a judge is more apt to question whether or not any nefarious circumstances, like coercion, led to the signing.
Consider This When Paying Your Own Salary
As a business owner, you may be sacrificing your salary in order to invest that money back into the business. In the event of a divorce, an ex-spouse might argue that their income and personal benefit was sacrificed as a result. A judge might determine that the ex-spouse should own more of the business because money they didn’t enjoy was invested back into the business.
Are you Employing Your Spouse?
If your spouse is working for the business, even if they’re simply supplying ideas on how to run or market it, they might be entitled to more ownership in the event of a divorce. In short, the more they’re involved in the business, the more they’ll own.
Over fifty (50) percent of first marriages and around seventy (70) percent of second marriages end in divorce. An experienced business law attorney that can provide advice on strategies to protect your business from being ravaged by divorce. A skilled family law attorney can assist with the preparation of the documents needed to protect your business. Bennett Weston LaJone & Turner, P.C. has both business and family law attorneys to guide you through this process.