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Using a prenup to protect a business in a divorce

A prenuptial agreement, or postnuptial for couples who are already married, can be a way for business owners in Texas to protect their enterprises if they get divorced. Some people may worry that these documents are ways to cheat a spouse out of a rightful share of marital property, but this is not necessarily the case. Instead, this agreement allows a couple to make decisions about how to divide property in an atmosphere that is less contentious than a divorce would be. A pre- or postnup can make the divorce process less difficult.

Such an agreement can eliminate the expensive and intrusive process of business valuation entirely by stating that the company is separate property. However, in some cases, the owner may want to grant the spouse a percentage of the company's value. Spouses who are co-owners might decide they want to keep the company even if they divorce.

Business organizing documents are another way of specifying that there is a sole owner and should a divorce occur, the company cannot be transferred. Since a spouse may still be owed a payout, it may be necessary to review the company's financial records. Carefully tracking all expenses, keeping business and personal finances separate, documenting how the company is funded and recording cash transactions can all help ensure that a clear financial picture can make this payout fair.

If there is no agreement in place, then based on community property laws in Texas, a business is supposed to be divided equally between the two spouses. In practice, this can be handled in other ways. For example, the spouse who is not the business owner might take another asset that has equal value. However, it is important to make sure that when assessing the value of the asset, taxes and other expenses associated with it are taken into account.

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