Protection of business assets starts long before divorce

If you are considering marriage, and you also happen to own a business in Texas, then now is the time to start an asset protection plan. You’ve no doubt worked long and hard to build a successful business, which, perhaps, you hope to pass on as a legacy to your children someday. By executing a prenuptial agreement before your wedding day, you can maximize protection of business assets, which would be particularly helpful down the line if you or your spouse would decide to file for a divorce.

Perhaps you’ve already been married for many years but never signed a prenuptial agreement. There are still several ways you can protect your business assets during divorce proceedings. To determine which options best fit your needs, you must first determine whether your business assets are marital property or separately owned property.

Examples of separately owned business assets in a divorce

The following list shows several examples of business assets that may be considered separately owned property in a Texas divorce:

  • Someone left the business to you as an inheritance.
  • You started the business before you married, and funds have not been comingled.
  • You have a prenuptial or postnuptial contract that lists your business as separately owned property.

In some cases, a business owner might think that the business is separately owned property when, in fact, it isn’t. For instance, if you started the business before your marriage but then comingled funds during marriage, those funds then became marital assets.

Protecting physical, financial and intangible business assets

Texas is one of nine states that operates under community property guidelines in divorce. This means that both spouses have a right to an equal share of the value of their marital property when settling a divorce. As a business owner, you possess three basic types of assets, including physical assets, which include a brick-and-mortar building (if applicable), equipment and other tangible items. It also includes financial assets, as well as intellectual property (intangible assets) like trade secrets or trademarks.

To protect your business assets in a divorce, you’ll want to do two things: 1. Take an inventory of all your business assets and compile a list. 2. Determine the value of your business, which means finding out how much it’s worth on the market. In addition to an asset valuation, you must also determine the current liabilities of your business, which have an impact on its overall worth.

Buy/sell agreements protect business assets

A buy/sell agreement might require a divorcing spouse to buy or sell out his or her ownership interests in a company. Such agreements typically protect assets when there are multiple business owners involved and one of them is going through a divorce.

Before heading to court, make sure you understand Texas property division laws and are aware of any contracts you signed that may be relevant to business assets in a divorce. Determine what you’re entitled to receive so that you can make sure you receive a fair settlement.