No one gets married believing that their loving relationship is doomed to fail. As a result, many couples neglect to consider a prenuptial agreement, spelling out how property will be shared if their marriage ends in divorce.
The lack of a formal agreement can have severe consequences if one spouse owns a business, which may have only been an idea when the marriage began. Dividing that business can be tricky during divorce, especially if the other spouse made direct or indirect sacrifices to help it grow.
Actions you can take to protect business assets
Many high-asset couples without a prenup instead decide to pursue a postnuptial agreement to avoid a potentially nasty fight over dividing marital property, such as a business. However, if no contract exists, business owners can still take steps that will help ensure a fair distribution of assets, including:
- Establish yourself as the business’s clear owner and include language in your formation documents that the company cannot be transferred in the event of a divorce
- Keep detailed records of all the sources of capital used to establish the business, and whether they included premarital or marital funds
- Keep your business and personal expenses separate to avoid potential complications over commingled funds
- Make sure all cash transactions for your business are completely documented
- Pay yourself a salary commensurate with market standards, as paying yourself less can have devastating effects when support amounts are determined
- Pay your spouse at least the market rate for their services, even if they have a minor role in your business
Take a professional approach to your divorce
The end of a marriage can cause intense emotions, but it’s vital to your future success to maintain a business-like approach. In Texas, all marital assets are considered community property unless you can prove that certain assets are separate and should not be shared with your spouse. An experienced attorney can help you protect your business and ensure that your assets are fairly divided.