Protecting a Business or Professional Practice During Your Divorce

 Posted on October 16, 2020 in Family Businesses

There are multiple financial issues that will need to be addressed during a high asset divorce. Couples who have a high net worth may need to complete complex property litigation as they determine how to divide the assets they own. These concerns can be especially important for spouses who are business owners, including those who are doctors, accountants, chiropractors, or operators of other types of professional practices. In many cases, a business will represent a primary source of income for a spouse, and they will want to ensure a company or practice can continue operating successfully after their divorce is complete.

Division of Business Interests

A business will be considered part of a couple’s community property if it was founded or acquired during their marriage. If one spouse owned a business before getting married, it will usually be considered separate property. While separate property will remain under the ownership of one spouse, the other spouse may ask to be reimbursed for contributions made toward the business, including time and effort put toward building the business or marital funds that were used to pay off business debts.

When a business is included in community property, spouses will need to determine how to divide business interests along with their other assets and debts. To ensure that a business can remain in operation, one spouse may maintain ownership of a business while the other keeps other assets of an equal value. One spouse may also purchase the business interests the other spouse would be entitled to receive, either through a cash payment or by making arrangements to pay the amount owed over time.

If a buyout is not possible, the spouses may decide to continue to co-own a business, and they may also continue managing the business together after their divorce. In these cases, spouses will want to create a partnership agreement that defines their roles and responsibilities and contains provisions allowing one spouse to purchase the other’s share of the business at a later date.

Protecting a Business From Division During Divorce

In many cases, business ownership will be an important issue to address during divorce, and spouses will need to determine how to divide their marital property fairly while ensuring that a business can remain in operation. To make sure a business is protected from being divided during divorce, spouses may want to address this issue before divorce ever becomes a possibility. A prenuptial or postnuptial agreement can be used to decide how they will divide business interests and other property.

A prenuptial agreement may address a business that a spouse owns before they were married, and it can specify that the business will remain their separate property. For a business venture that was begun after getting married, a postnuptial agreement may state how ownership of this business will be handled in the case of divorce while also including provisions to ensure the financial security of both spouses.

Contact Our Austin, TX Family Business Asset Division Lawyer

At Powers and Kerr, PLLC, we can help you address complex assets during your divorce, including family businesses or professional practices. We can also help you create a marital agreement to protect your business and ensure that it can continue operating, no matter what happens. To learn how we can address your financial needs, contact our Austin high asset divorce attorneys at 512-610-6199.

Sources:

https://statutes.capitol.texas.gov/Docs/FA/htm/FA.3.htm