When a Texas couple divorces, they generally must go through a process of dividing all of their assets and liabilities. In situations when one spouse owns a business, this process can become more complicated. If steps have not been taken to protect the company before and during the divorce, the fate of the company could be jeopardized and the spouse that owns the business may find him or herself in a difficult position when trying to rebuild financially after the end of a marriage.
The best time to start protecting a business in case of divorce is before the marriage actually takes place. This can take the form of a prenuptial agreement in which both parties agree that the business belongs to the person who founded it and the other person agrees to a financial division that can keep that business intact.
In addition, sound business practices can also protect an enterprise during divorce. This includes proper accounting methods that establish where the money to found the business came from and the source of all income as well as outgoing payments. In addition, business and personal finances should be kept strictly separate, which will save professionals the trouble of trying to determine whose assets supported the company.
Business owners should also be wary of taking salaries that are significantly below market rates for similar position: Courts have been known to decide financial agreements and spousal maintenance based on imputed income, meaning what the judge thinks that a business owner ought to have been making, regardless of his or her actual salary. Business ownership adds another element to the property division process, and having the assistance of both an attorney and a financial professional can be advisable.