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How to divorce-proof your Texas business

On Behalf of | Aug 27, 2021 | Divorce |

Despite a couple’s best intentions going into a marriage, there is no guarantee that they won’t divorce. You may want to divorce-proof your business to help protect your hard work in case your marriage ends. Otherwise, a Texas court might divide the ownership of your business as part of the divorce decree.

Prenuptial or postnuptial agreement

Ideally, you want to create a prenuptial agreement to reduce the messiness of the end of a marriage. It’s better to make decisions on how you divide assets when both of you are calm and clear-headed than when you are feeling resentful or any other negative emotion.

If you missed your chance to create a prenuptial agreement before marriage, you can write a postnuptial agreement. It can generally cover the same topics.

Make yourself the sole owner

When you’re unable to get a postnup agreement, you could make yourself the sole owner of your business. In your organizing documents, declare that ownership of the business isn’t transferable during a divorce. You could specify a certain cash reward you will give your spouse instead.

If your spouse had an involvement in the business, even indirectly, you should consider a fair cash reward to avoid disputes. Alternatively, you could choose to make sure that your spouse doesn’t help or make sacrifices for your business to prevent them from staking a claim to part of your company.

Keep detailed records

To back up your claims, you should keep detailed records of where money for the business comes from and how the money goes out. This is especially important when you use premarital money to fund your business. Don’t mix your business expenses with personal expenses.

If your spouse works at your business, pay them the same salary you would anyone else. Otherwise, your spouse could claim partial ownership of the business during a divorce.

There’s a lot of steps you could take to divorce-proof your business. Essentially, you are making it clear legally that you have sole ownership over the business and that your spouse is already fairly compensated.