Businesses frequently take many years to become successful. During those years, the business owner spends countless hours of difficult personal labor ensuring the business has what it needs to succeed. He or she usually spends significant amounts of personal money to help the business grow. Yet when a business owner gets divorced in Texas, he or she risks losing everything in the marital asset division. Not only is this discouraging and demoralizing, it can cause an older business owner to risk retirement prospects by derailing their financial future. Thankfully, this outcome is not inevitable. With the help of a prenuptial or postnuptial agreement, you can protect your business ownership against an unexpected Texas divorce.
How Can a Prenuptial Agreement Protect My Texas Business?
Prenuptial agreements exist specifically to detail the treatment of property in a divorce when spouses are clear-minded and willing to protect their interests and even their spouse’s interests. Although prenuptial agreements may not seem romantic, the period before the marriage begins is when each spouse has the opportunity to delineate what he or she wishes to remain personal property in the event of divorce.
Would My Business Be Considered Community Property?
Although your ownership in the business before your marriage would remain your personal property, any business growth or earnings are marital property after the marriage has begun unless otherwise specified in a prenup. Anything that is not protected by a prenup or postnup must be divided equally in a divorce. It can be very difficult to determine how much of a business’s value was one spouse’s personal property before a marriage, especially if that spouse did not document a business valuation just before the marriage began.
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