Running your own business takes a lot of hard work and effort. It may force you to spend more time working and less time with your family. In the end, your work as a business owner or entrepreneur may contribute to the end of your marriage. If you are a business owner facing divorce, one of your biggest concerns is how divorce will impact your business. Will your spouse receive a significant portion of your business assets in divorce?
Asset division in Texas
Texas is one of nine community property states. When couples divorce in community property states, they split their marital assets equally, 50-50. So, if you established your business during your marriage, it could be a marital asset and your spouse may receive half of its assets. If you launched your business before you married, your spouse still could receive some of the assets your business has accumulated during your marriage.
Protecting a business from divorce
However, business owners do have options to protect their business from the impact of divorce. The most effective option though is to create a prenuptial agreement or postnuptial agreement. With a prenup or postnup, you can define what business assets your spouse will receive if you divorce.
Other ways to protect your business from divorce include the following:
- Keep your finances separate. Don’t use your personal income to fund your business or take out a second mortgage on your home to fund your business. If you divorce, this will cause more confusion and difficulty when you need to split assets with your spouse.
- Pay yourself a decent salary. If you don’t pay yourself fairly, your spouse could use that against you in divorce and thus gain more of your business assets.
- Put your business in a trust. If your business is in a trust, your business assets are the trust’s assets and not subject to asset division in divorce.
- Take out a life insurance policy that you can use assets from to pay your spouse for their share of your business assets.
Getting help with dividing assets in divorce
If you are a business owner concerned about how divorce could impact your business, you need to consult an experienced divorce attorney. An attorney can review your situation and let you know what options you have and how to minimize the impact of divorce on your business.
You need to be proactive to truly protect your business from divorce. With an attorney’s help, you can take the right steps to ensure your divorce doesn’t derail your business too much.