For some Texas entrepreneurs, owning a business and going through a divorce can have upsetting results if the business assets are not protected. Thinking ahead about the possibility of divorce, however, might be the key if the marriage comes to an end.
Plan for the future
If you are a business owner, you should plan for different possibilities in the future. And while most people do not think of divorce when they get married, about 50% of marriages do end in divorce. When no provisions are in place for how to handle a business, divorce could mean losing part of your business to your ex-spouse or having them become an involved partner that you might no longer want. If you have other business partners, they might also feel uncomfortable if your ex-spouse is suddenly part-owner and making decisions about the business.
There are, however, ways to plan on protecting your business interests if your marriage ends. These include:
- Getting a prenup that establishes marital and individual property, including the business
- Getting a postnup soon after marriage that establishes individual and marital property
- Setting up a trust naming yourself as beneficiary
- Creating a buy-sell agreement that outlines how business value will be established and sets parameters for selling part of the asset
Documentation is important
As soon as the business is established, it might be a good time to define how the transfer and sale of shares will be handled. This might be particularly useful if you own the business with several other partners who might be concerned about their investment if your marriage ends in divorce. In those cases, it might be good to set up an agreement that establishes who has first rights to buy any shares that might need to be sold as a result.