Wealthy couples obtain many joint possessions during their marriage. Those can include bank and retirement accounts, real estate properties and even a business. For spouses who share joint ownership of a company, figuring out how to split it amid a divorce is often difficult.
If the unfortunate occurs, spouses may question the future of their company. These uncertainties can keep them up at night, as they may wonder how they’ll maintain operations after going their separate ways.
Luckily, couples can protect their business by taking the proper steps.
How Texas marital property rules factor in
Unlike the majority of states, Texas is a community property state. This means property couples obtain during the marriage gets split in half unless otherwise specified. However, not every asset gets awarded equal distribution. Depending on the circumstances, Texas courts may determine the property’s status from the moment couples obtain them, regardless of what happens later.
3 Tips for business protection
Divorce can take an emotional and financial toll on wealthy couples. That’s why it’s important to recognize how it can affect business performance. Here’s how spouses can maintain operational stability during tough times:
- Keep business and personal expenses separate: While it can sound convenient at the moment, doing can complicate matters. For instance, purchasing company equipment with personal income may not be a good idea.
- Sacrifice other assets: Couple’s assets are often added up and divided during a divorce. If one or both spouses wish to protect the business long-term, they can forfeit less-desirable possessions. Some of those may include a vacation home or extra luxury vehicles.
- Get a business valuation: In many cases, one spouse ends up owning the business. However, the other one can still get a share of business earnings. Depending on their level and length of involvement in the company, they could request an amount that hurts profits. To avoid this, spouses may want to consider getting a court-appointed valuation. That way, they can base value payments off of current revenues rather than future growth projections.
Wealthy couples deserve to move on
Divorce can be an emotional and financial roller coaster. But by taking the necessary steps to protect a business during a divorce, they can shift their focus to future ventures and move forward in their post-marital lives.