Business owners in Texas can protect company assets in case of divorce with a prenuptial agreement. However, it can be difficult for spouses to talk about prenups and the possibility of divorce. Therefore, another option is to address divorce-related issues in the company’s organizing documents. These documents may be written to grant a cash award for a spouse in lieu of actually dividing the business.
The purpose is not to try to cheat a spouse out of their share of marital property but to establish parameters to make a divorce, if it happens, less contentious. For example, while a prenup might specify that the company is separate property, it could also name a percentage of the company’s value that a spouse can claim. These types of documents are just as important if the couple runs the business together. One could buy the other out in a divorce; although, some couples may agree to keep running the company.
Whether or not these agreements are in place, carefully kept financial records can also make the process of divorcing with a business less complicated. Business and personal expenses should never be mingled, and owners should track any transactions conducted with cash as well.
In Texas, a community property state, protecting a business may be particularly important since family law states that marital assets are supposed to be divided equally. In order to help ensure a fair division of property, a divorcing spouse may want to partner with an attorney. A lawyer could specifically address issues related to business assets.