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Protecting a business in case of a divorce

Many married Texas couples will have one or both spouses owning their own business. However, if a couple divorces, it can throw the spouse's whole business into chaos if the other spouse tries to claim part of the business for him or herself. Still, certain steps can be taken to prevent a difficult trial and excessive legal fees.

A piece by the Huffington Post provides advice for a spouse to protect a business from divorce proceedings. One of the article's major recommendations is for the business owner to not co-mingle personal finances with business finances. The piece also recommends that a business owner not borrow from personal financial accounts or use personal assets for business capital. In addition, entrepreneurs can pay themselves a competitive salary, meaning they should pay themselves a rate equal to or above the industry average for similar positions. This prevents a spouse from claiming there is more for him or her to receive. Additionally, the article advises people to have their company valuated by an objective party at the time of the marriage.

If possible, the Huffington Post also describes a prenuptial agreement as a viable option. Before two people get married, they can work out a mutual accord to allow the spouse that owns the business to keep it and its assets in the eventuality of a divorce. However, broaching such a subject when a person is about to marry can be emotionally risky and could cause complications the business owner would likely wish to avoid.

Finally, according to Forbes, there is an additional option to guard a business. A person could establish a protection trust that permits the person to transfer ownership of the company into it, which effectively makes any interest the spouse may have in the business moot since the other spouse no longer owns the company. Under law, the trust is the legal owner of the business. Trusts also can be formed by an individual without the permission of a married spouse.

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