Divorce is more common than ever, with about half of all marriages ending this way. The dissolution of your marriage may cause significant disruption to your Texas business, but it’s possible to find an option that minimizes the damage.
A business as marital property
Property division is one of the most challenging aspects of the divorce process. This is far more difficult when you are an owner of a company.
There are far-reaching financial implications of a marriage dissolution on your business even for uncontested divorces. It’s often advisable to take preemptive steps that will help keep your earnings flowing and your organization running in the event of a divorce.
Marital property encompasses all assets and income that both spouses came into over the course of being married. There’s always a chance that a claim may be made on virtually everything that has your name on it.
There are nine states in the U.S. with community property laws. This means that marital property is split evenly amongst the two parties. Those states are:
- Arizona
- California
- Louisiana
- Nevada
- New Mexico
- Texas
- Washington
- Wisconsin
The rest of the U.S. follows equitable distribution law, meaning that the final determination about the couple’s marital property is made in court. This process is often drawn out and contentious because it’s hard for both parties to come to an agreement on how to fairly divide the property if they didn’t see eye to eye from the start.
The uninvited partner
Things are made more complex for significant stakeholders. When your stocks are divided in the divorce, it’s possible that your ex-spouse will become a partner of the business. It also means that your status in the company has been reduced after the dilution of your interest.
The daily operations of running a business are frequently disrupted by the divorce process. The proceedings tend to be emotionally draining and mentally taxing, leaving the person going through it with less bandwidth to focus on important tasks related to running the company.