What happens to the business in a divorce?

What happens to the business in a divorce?

| Feb 3, 2021 | Divorce |

Texas residents negotiating property division during a divorce might find that the situation becomes more complicated if there is a business involved. The options for dealing with a business when a marriage ends sometimes start before the marriage begins. In other situations, the end of the marriage might mean the end of the business as well.

Planning early for the end can provide easier solutions

Though most couples do not plan for a divorce when the marriage is just beginning, a prenup or even a postnup soon after the wedding can prevent a lot of headaches later. These agreements can establish separate property if the couple does decide to split up, and they can address what will happen to a business that already existed before marriage. This can be helpful in a community property state like Texas where the division of marital property in a high-asset divorce must be equal.

Other ways to handle a business during divorce

If a prenup or postnup was not signed before the marriage or early in it, there are other options available. These include:

  • Negotiating with the other spouse to provide assets of equal or greater value than their part of the business
  • Agreeing to pay the other spouse over a set time for the value of their share in the business
  • Putting the business into a trust where neither spouse is the owner but one is the manager and retains control
  • Selling the business with the understanding that any profit made will need to be divided between the spouses

Keeping business and marital finances separate during the marriage can also be helpful when deciding how to deal with the business during divorce. Different solutions work for different people, so each couple should evaluate the situation carefully before deciding how to proceed.