You and your husband spent years building not only a family together, but a business as well. Now that divorce is looming on the horizon, you are worried about what will happen to the business that you worked so hard to create and make profitable. You are not alone with your concerns. Studies have shown that many small businesses fail because of divorce.
Fortunately, there are steps you can take to help your business survive your divorce. An experienced family law attorney in the Pearland area can review your situation and provide viable options for your divorce settlement. Read further for some tips on protecting your business during divorce.
Get it in writing
One of the worst parts of divorcing with a business is valuing the entity and then agreeing on the split. If you and your husband started the business together, Texas will consider it community property. More than likely, the court will rule that you are each entitled to a share of it.
If you already have a prenuptial agreement, shareholder agreement or buy-sell agreement in place, you could save yourself a long legal battle. These contracts usually describe how business co-owners should buy or sell their interests or even the shareholder's responsibilities in case of divorce. Having such a contract in place could help settle the matter without going through years of litigation.
Have a team of advisors
During the divorce process, you could find yourself easily distracted by the situation. Be sure to have a team of advisors available. Surround yourself with people you trust, such as friends and trusted associates. Before you make any strategic decisions regarding the business, have someone review your plan.
Agree on using one valuation company
In general, valuation services can be very expensive. They often range from $10,000 and up depending on the size of your operation. If possible, you and your husband should agree on using one valuation company in order to avoid two sets of expenses.
Do not split the business in half
Sometimes, when spouses cannot agree on a valuation, they simply end up splitting the company in half. If you and your husband are already at war in your marriage, the odds of successfully operating a business as equal partners are rather slim. Instead, consider coming to an arrangement where one of you maintains ultimate control of the company while the other continues to receive the appropriate share of income. Another option is to draft a shareholder agreement giving each of you the right to buy out the other in case one of you decides to exit the business.
Divorce is never easy. When your marital assets consist of a family business, it becomes even more complicated. If you are considering divorce, it is important to understand Texas property division laws so that you can take the necessary steps to protect your interests.