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How to protect your business assets in a divorce

On Behalf of | Jan 2, 2020 | Firm News

Going through a divorce can be complex no matter the financial situation a person is in. However, if you own a business and have a high number of assets, it is reasonable to be concerned about losing a significant portion of these assets when going through the divorce. If you want to file for divorce but you are hesitant to do so because of the possible financial implications, you should make sure that you understand some of the key strategies for protecting your business.

In Texas, community property is recognized. This means that all marital property that is subject to division at divorce is divided equally, regardless of which spouse contributed most to the acquisition of assets. This can be detrimental to business owners who want to retain the assets they have worked to acquire. The following are some key ways to protect your business assets.

Put in place a postnuptial agreement

If you did not put a prenuptial agreement in place before you got married, you may be regretting your decision. However, you still have the opportunity to put a postnuptial agreement in place. This can be beneficial for both parties because it can reduce the cost of legal fees in the case of a dispute.

Consider a trust

Ideally, you will have formed your business as an LLC or corporation before marriage. If you did this, your business assets will be largely protected. If your business assets are not in an LLC or corporation, they may be vulnerable to division. Many people in this situation choose to place their small businesses in a living trust. This can shield assets from division in the event of a divorce.

Try to be amicable with your ex

You may hold negative feelings toward your divorcing spouse, but remaining amicable could impact the divorce process significantly. If you are willing to communicate well and make fair compromises, you may be able to come to a mutually beneficial agreement.

Worrying about the financial impact of a divorce should never be a reason to avoid it. Make sure that you start the research and planning process early on so that you are prepared for a successful outcome.