When you are a business owner, you have a lot on your plate. It is a stressful career choice, but you’ve made it work thus far. Now, however, your personal life is falling apart, and you have concerns about how ending your marriage may impact your company. Know this, divorce does not have to destroy your company.
How your divorce will impact your business depends on several factors. Was the business up and running before you got married? Did you take steps to protect your company with a pre- or postnuptial agreement? Can one classify the business as separate property? Did your spouse play a role in operations?
Separate or marital property
Texas is a community property state. This means that any assets acquired during a marriage are subject to property division unless a valid pre- or postnuptial agreement that gives specifics about asset division exists or proof exists that the business is separate property.
If you started your business before marriage and you have been able to maintain it as separate property successfully, it may be yours to keep as part of your divorce settlement. If the business started after you said your vows, or your business and personal assets have been co-mingled, your spouse might have claim to a share of the company.
Spouse involvement
If your spouse worked at the company without proper compensation, he or she may try to claim rights to a high percentage of the business’ value. If he or she did not have anything to do with business success, but no marital contract exists, he or she may have the right to seek a percentage of the value added to the company during the marriage.
Options when the business is marital property
If it is not possible to prove that the business is yours alone, there are a few things you can do to save your company. You can buy out your spouse if he or she claims to have a right to the property. You can continue keeping the company running as is, working with your ex as a business partner. When all else fails, you could sell, split the proceeds and start over.
You can figure this out
There are a number of ways to approach the treatment of your business during the property division phase of divorce. Legal counsel with experience handling the treatment of complex assets can prove valuable to have in your corner as you work toward a fair divorce settlement that allows you to keep your company going without inflicting too much damage to its bottom line.