Concerns for a Business Owner During a Divorce
Learn about the many concerns business owners have during a divorce. Find out how divorce can impact the ownership of a business.
Anyone who owns a business should plan for what would happen if they were to get a divorce. Divorce laws in Texas honor the community property idea, which means that anything a couple obtains during the marriage belongs equally to both of them. When it comes to a business, this could mean trouble.
Could divorce lead to closing a business?
A divorce can lead to having to close a business because the court will usually divide it equally between the spouses. U.S. News and World Report explains that if this happens, the spouses will have to figure out how to move forward. If one spouse does not wish to run the business or have any involvement, then the other spouse may have to figure out how to buy him or her out.
How can I keep my business in a divorce?
It is hard to keep a business in a divorce if a business owner does not plan ahead. Forbes explains that ideally, a person would have a prenuptial agreement or postnuptial agreement in place addressing the ownership of the business in the event of a divorce.
Absent an agreement, a business owner would need to operate the business in a way that keeps it separate from marital property. This would include keeping clear records, maintaining business finances separate from personal finances and paying a spouse working in the business a fair wage.
How can we divide our family business?
If a couple owns a family business together, they have several choices on what to do with the business in a divorce. Forbes explains that if neither wishes to keep the business, then the best option is to sell it and split the profits. However, if one spouse wishes to keep the business, then he or she may buy out the other spouse by paying half the business’ value.
Another option if the couple cannot agree to split the business in any other way is to continue running it together as business partners. If this happens, the couple should create a partnership agreement to avoid issues in the future.
What should a business owner do prior to a divorce?
The best thing for a business owner to do is to secure an attorney who can figure out a strategy for handling the business. An attorney, such as those at the Law Office of Roland R. Esparza, P.C., will understand the legal aspects of the situation and be able to offer advice on what to do moving forward. He or she can also help the business owner to understand the options and potentially assist with negotiations with the spouse.