Steps You Can Take to Safeguard Business Assets during a Marital Breakup
For many, there’s nothing like the control and freedom that come from owning your own business, making your own decisions and getting the direct benefit of all your hard work. Unfortunately, though, when you own your own business, those assets may be at risk in a divorce proceeding. What can you do to ensure that, if your marriage falls apart, you won’t have to start your business all over again?
Before You Do Anything…
There’s a possibility that you won’t have to do anything to protect business property and interests. Texas is one of a number of states that apply community property principles during the division of marital debts and assets. As a general rule, in Texas, any property or debt acquired during the marriage is community property and must be divided equally. If you owned and operated your business before you were married, any assets that the business owned before you were married will be considered “separate property” and not subject to community property rules.
There’s also an exception under the community property laws in Texas for property acquired during the marriage either as an inheritance or a gift. So, if your business belonged to a family member and you inherited it or it was given to you during your marriage, you may be able to protect any assets received, provided you haven’t commingled the business assets with personal assets
Protect Your Business with a Post-Nuptial Agreement
This is a pretty straightforward process, whereby you negotiate an agreement that will leave your business assets and interests untouched by a divorce proceeding. Obviously, you will have to give something to your spouse in exchange for that promise. Otherwise, you won’t have a binding agreement (and you probably won’t get your spouse to sign off on it).
Negotiate a Marital Settlement Agreement
While assets owned by a business, such as real estate, office equipment and inventory, are customarily difficult to divide, the court can (and often will) divide the interest in a business. One effective way to keep your business intact and in your hands is with a marital settlement agreement. Instead of letting the court determine the distribution of property, you can try to work out an arrangement with your former spouse that allows you to keep your business.
You may agree to let your ex have a greater percentage of other assets (or full ownership of them) in exchange for allowing you to keep full ownership and interest in the business. For example, you can allow your former spouse to have all interest in the marital home as a trade-off for letting you keep the business. As a general rule, when you attempt to negotiate a marital settlement, you’ll have to have the business value calculated, usually by an independent party.
Contact the Proven Family Law Attorneys at Bailey & Galyen
At the law office of Bailey & Galyen, we offer a free initial consultation to every client. For an appointment with a knowledgeable and experienced family law attorneyy, contact us by e-mail or call our offices at one of the convenient locations listed below. We will take your call 24 hours a day, seven days a week.