Whenever a business owner faces divorce, their business may suffer serious consequences and may even be forced to dissolve completely. While every divorce comes with some high stakes, divorce involving a business owner is considerably more complicated, in most cases. If you own a business and see divorce in your future, you must consider all of your legal options in order to protect your business and avoid other unnecessary losses.
Review your prenuptial agreement
In Texas, divorcing spouses must divide their marital property equally, and it surprises many people to learn that businesses typically qualify as marital property, just like savings accounts, real estate and vehicles. However, prenuptial agreements allow spouses to protect their property and keep it separate. If you have a prenuptial agreement, it may protect your business from unfair property division, so it is wise to review the terms of the agreement carefully.
If you do not have a prenuptial agreement, your spouse may be willing to sign a post-nuptial agreement to keep your business separate, although these agreements often offer weaker protections.
Consider your spouse's involvement
If your spouse has a valid claim on half of your marital property, then they may have the right to demand half of your owned value in your business. For some business owners, this loss is acceptable, while for others it may sink the business.
In some cases, courts allow business owners to keep a business out of their personal property during divorce, if the owner can prove that their spouse had very little involvement with the business and did not impact the owner's decisions about the business significantly. In these cases, the less involvement a business owner's spouse has with a business, the better.
Consider your other assets
If you cannot keep your business out of the property division process in your divorce, you may still have some ways to keep it safe. First, it is necessary to determine the actual value of your business, typically through an independent business valuation. With a clear understanding of this value, you may have other assets you can offer your spouse to even the scales, or may be able to set up a structured payment plan to satisfy their claim over a period of months.
However you choose to proceed, do not waste time before you move forward. The longer you have to define your priorities and prepare your divorce strategy, the more legal tools you have to protect your rights during this difficult process.