When you get divorced, any property that’s considered community property is divided equally between both spouses. This includes any bank accounts, real estate holdings, and even business ownership. If both spouses own the business, ownership needs to be either transferred to one spouse or the business needs to be sold. However, there may be additional options. Protecting business ownership during divorce in Travis County, Texas can be an important factor.
Protecting Business Ownership During Divorce in Travis County
If you choose to move forward with your divorce in Travis County, your case is decided by the Travis County District Court, Family Division. This court is located at the Travis County Civil and Family Courts Facility on Guadalupe Street in Austin. The state’s laws regarding community property are strict. Texas has a divorce rate of 2.1 per 1,000 individuals, and a marriage rate of 49%. If your business is community property, splitting it may be unavoidable.
Protecting your business ownership during a divorce relies almost entirely on defining separate property and negotiating a fair asset division with the court. Certain preventative measures can be enough to help you during this time, but if you don’t take those measures, they won’t be available to you. You should hire a divorce lawyer to walk you through your options and provide you with potential solutions. Here are some specific strategies you may use:
- Prenuptial agreements. The most effective way to protect your business in the event of a divorce is by enforcing a prenuptial agreement. A prenup is a legally binding document that you and your spouse sign before the marriage. It outlines the terms of divorce, including asset division and/or buyout terms for your business. If you have substantial assets, you should always insist on a prenup before agreeing to marriage.
- Buy-sell agreements. If you have business partners who own a piece of your business, there may be a buy-sell agreement in place that outlines what to do with a partner’s shares if that partner gets divorced. This agreement may protect the business from any disruption and could even prevent your spouse from acquiring voting rights or any ownership of the company. Have your lawyer look through the buy-sell agreement.
- Financial separation. It may be a good idea to never combine your business accounts with your personal accounts. This prevents your spouse from having any financial claim on the business in the first place, as the line between business and personal funds never gets blurred. Depending on your situation, your business may be seen as separate property or a portion of it may still be seen as community property. Your lawyer can help make sense of it.
- Asset offset. If your business is viewed as community property, you are not automatically required to sell it or close it. Instead, you can retain total ownership of your business and buy out your spouse’s portion using other marital assets. By giving them home equity, retirement accounts, or a portion of your personal savings, you can keep the business.
- Payout agreement. Another option available to you is to draft a payout agreement. In this agreement, you may promise to pay your spouse their share of the business value over an agreed-upon period that’s secured by a promissory note.
Hire a Collaborative Divorce Lawyer
If you are facing divorce, consider hiring a Travis County divorce attorney to help you determine the most effective way to preserve ownership of your business if possible. Business divorce cases can be complicated, emotional, and messy. It’s important that you understand how the state’s divorce laws can affect your business. Our firm can devote more than 25 years of experience in divorce cases to your situation and help you find a solution.
FAQs
How Do I Protect My Business So My Spouse Can’t Get It in a Divorce?
Protecting your business in the community property state of Texas starts by outlining the origins of your company. By proving your spouse was not involved in the formation of or a contributor to the business, it takes it off the table. You may also want to consider drafting a prenuptial agreement before the marriage that outlines very strict details on asset division in the event of divorce, including listing your business as solely your property. Never combine business and personal funds.
What Shouldn’t I Do During a Divorce in Texas?
There are many things you should never do in a divorce in Texas, as they may serve to make things worse for you. Never badmouth your spouse publicly, never destroy financial documents, and avoid speaking about your divorce on social media. Above all, you should never even try to hide assets. Hiding assets is illegal in a Texas divorce and could result in serious legal penalties that might even include jail time. Be transparent about your assets and debts.
What Influences Property Division in a Texas Divorce?
While community property laws are enforced in a Texas divorce, there are many different factors that can sometimes influence the judge’s decision to aim for a fair split. The judge may take into consideration each spouse’s earning capacity, health conditions, child custody, reimbursement claims, and any evidence of fault in the breakup of the marriage. If your spouse’s affair caused the divorce, that could affect their settlement.
Should I Hire a Divorce Lawyer?
You should hire a divorce lawyer. When the future of your business is at stake, you shouldn’t take any chances. You need to make sure that your business is protected. If you don’t have a prenup in place, a good lawyer can help you determine another possibility. Throughout your divorce, it’s always a good idea to have legal representation for someone who understands how high the stakes are and has helped others through similar situations.
Texas Collaborative Divorce Lawyer
To protect your business from being split up in a divorce, you should consult with a divorce lawyer who can provide you with workable options for asset protection in Travis County. At Heinrich Christian, PLLC, we can build up your case, define separate property, and do what we can to protect your business. Contact us today and let our team’s knowledge and experience give you the confidence you need in your divorce.
