Divorce: What Small Business Owners Need to Know
Many marriages end in divorce, and no matter how good things seem, you never know when you might become half of a separated or divorced couple in the future. If you run your own business, the fact that you could end up divorcing in the future could put your company at risk if you don't take steps to protect your organization.
Dallas divorce lawyers can provide advice before marriage on how to protect any existing companies you have and how to ensure that if you start a business in the future, you will not have a problem if you divorce.
If you are already married and starting a business, getting legal advice to ensure you are protected in case your marriage comes to an end can also save you a lot of hassle and aggravation. Finally, if you are in the process of ending your marriage and you are a business owner, you must get advice from an attorney who understands complex divorce cases to try to protect your company.
What Small Business Owners Need to Know About the Risk of Divorce
Texas is considered to be a community property state, so when a couple is married, money and property acquired during the course of the marriage belongs to both spouses. Each spouse is entitled to a 50-50 share of marital property.
When you build and grow a business during the marriage, your ownership stake in that company – and the assets the business owns – could potentially be considered part of your shared marital property that needs to be divided up during the course of the divorce settlement. The way in which a business and its assets are treated can depend, in part, on whether the company is operated as a sole proprietorship or has been created as a separate legal entity such as a S-corporation or a C-corporation.
When you come into the marriage with a business, the value of your ownership stake could become co-mingled and no longer be treated as separate property depending upon the way in which you manage the organization. If you do not maintain strict separation of separate property owned before marriage, it becomes part of the marital assets that need to be divided.
If you do not want your spouse to have a legal stake in the company and share ownership, using a prenuptial or postnuptial agreement can be a smart step to take. The agreement can specifically address business ownership.
If you are running a business together as a married couple, you'll also want to ensure you have a buy/sell agreement that stipulates what will happen if you divorce. Otherwise, there could be a major fight over the company's future that affects operations.
Finally, if a business is being divided as part of the shared marital property in a divorce, you'll need to ensure it is valued properly. This can require the help of experts.
Dallas divorce lawyers can help you to take steps to protect your business either before marriage, after you are already married, or when you are ending your union and dissolving your marriage. You have worked too hard to grow your company to see everything fall apart because your marriage is ending, so you need to make sure you get solid legal advice as soon as possible.