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How to protect a business in a Texas divorce

Tuesday, July 17, 2018

No one enters a marriage initially thinking that it may end some day in the future. However, a business owner would be wise to take steps to protect his or her interests, should a Texas divorce occur later. It is important to note that if a spouse has participated in the business operations in any way, that spouse may have a stake in the business. Those who leave the workforce to care for children may also claim a stake in the business. To keep the rightful portion of a business, many seek legal protection.

Experts recommend sacrificing other assets to retain 100 percent ownership in the business. In other words, it may behoove an individual to forfeit such items as a house, luxury vehicles, retirement accounts or valuable collectibles. It is critical to never hide assets in divorce proceedings. When other assets are sacrificed, the portion of the business that an ex-spouse is eligible to receive is reduced.

Another way to protect a business is for one partner to pay the ex's share of the business over time. This is a workable solution if all the parties agree to a fair valuation of the business. If this option is chosen, a detailed agreement and record of payments should be maintained.

Prenuptial or postnuptial agreements are also a way to protect interest in a business. A business could be claimed as separate property when someone already owns it prior to marriage. However, this claim may not hold up if a spouse participates in the operation of the business in any way.

When business owners are contemplating a Texas divorce, it is important to consult a family law attorney to protect their assets and interests. An experienced lawyer will evaluate a client's situation and recommend the best course of action. A knowledgeable attorney can provide much-needed guidance throughout divorce proceedings.

Source: tgdaily.com, "3 Ways to Protect Your Business from Divorce", May 10, 2017

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