If you own a business at the time of your marriage, you might assume that you could not lose any part of your ownership if your marriage were to end in divorce. But that is a dangerous assumption. It is crucial to have a legal agreement that says your spouse will not receive a portion of that business in divorce if you do not want them to. Prenuptial and postnuptial agreements If you have not yet gotten married, a prenuptial agreement can protect your business from being divided (or your spouse seeking something of equivalent value) in divorce. If you were already married when you started the business, a postnuptial agreement can serve the same purpose in protecting your business (and potentially other interests). A postnuptial agreement is essentially the same thing as a prenup. The only real difference is that it is put in place after a couple is married. Since Texas is a community property state, couples often use prenups or postnups to protect their interests. Contrary to popular belief, community property laws do not mandate that a couple’s assets are split precisely in half in divorce. Community property means assets acquired by one or both spouses (with some exceptions like inheritances) during a marriage are subject to a just and right division in divorce in the event of litigation. Prenups and postnups can be used to keep specified assets (like businesses) out of the division process. Agreements if the business has multiple owners If you own a business with one or more partners or you are a primary shareholder in a business, other agreements may include provisions to protect the company during a divorce. It is important to understand the terms of these contracts if you are required to sign one. Finally, if you are in line to inherit a family business when the current owner passes away or retires, it is still important to ensure that the business is protected even though it could be considered an inheritance. There are many possible scenarios in which you may need to protect a business. Whatever your situation, it is critical to get sound legal guidance so that you can make sound legal decisions regarding your rights and options accordingly.The post How could a divorce affect my business? first appeared on Jeff Gilbert Law Office.
