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Methods to preserve business assets in a divorce

Texas business owners may not have accounted for a marital split as a possible risk to their companies. However, roughly half of all first marriages end in divorce, and an even higher percentage of second and third marriages don't last either. Even if a company was run by one spouse, it may be considered a joint asset. In some cases, a couple's entire net worth may be tied up in the business.

Therefore, it is more likely that a company is sold or incurs heavy debt as opposed to one party buying the other out. A prenuptial agreement may be an effective way to protect business assets in a divorce. As long as the agreement is valid and not signed under duress, the agreement may negate community property laws in Texas and similar states. If possible, it may be easiest for both spouses to stay together as business partners after a divorce.

Selling the business may have some potential benefits for both spouses. It may provide them with the money necessary to pursue other interests while also reducing the odds that either spouse is financially tied to the other after the split. However, it should be noted that a company may take months or years to sell, which could prolong a former couple's business relationship.

In a divorce, marital property such as a business may be split 50/50 regardless of who actually runs or works for the company in the absence of a prenuptial agreement. Business owners may want to talk to an attorney prior to starting the divorce process to learn more about their rights and how to potentially preserve the company. Individuals may want to look into buy-sell agreements or other postnuptial agreements to ensure that a property is split fairly.

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