For Your Business. For Your Children. For Your Life.

Protecting business assets in a divorce

Texas is a community property state, which means marital assets are generally divided equally by a judge in divorce cases even if this leads to an unfair outcome. If you live in Texas and own a commercial venture, there are steps that you can take to protect your business if you or your spouse ever files for divorce. These are steps that you should seriously think about taking because half of all marriages end in divorce, and businesses owned by divorcing spouses are sometimes subject to division because of asset commingling even if they were owned before they got married.

Prenuptial and postnuptial agreements

Prenuptial and postnuptial agreements are a popular and straightforward way to protect business assets in a divorce. However, the provisions of these agreements have to be basically fair or they could be challenged and struck down in court. If business assets are significant, prenuptial or postnuptial agreements should contain equally significant concessions in return for them.

Business agreements

Operating, partnership, shareholder and buy-sell agreements can also protect business assets when couples go through a divorce, and drafting a buy-sell agreement is often prudent even when a prenuptial or postnuptial agreement is in place. Partnership and shareholder agreements can prevent business interests from changing hands unless other interested parties agree, and buy-sell agreements put a formula into place to determine the value of a business that could be very useful in a divorce.

Protecting businesses

Most couples walk down the aisle hoping that their marriages will last forever, but about half of them end up being disappointed. Businesses serve the community and provide jobs as well as income, so entrepreneurs have a duty to protect them. Drafting prenuptial, postnuptial or business agreements will not doom a marriage to failure, but it could prevent a long, expensive and public court battle if that is what happens.