Are you a business owner who would like to know how to protect your business during a divorce? Today I want to walk through five things you need to be thinking about.
If you own a business in the state of Texas and are considering divorce, the first thing you need to know is that character counts. You need to know whether your business is going to be characterized as community property or separate property.
The second thing you need to know is what kind of ownership interest you have in your business. Different business entities have different types of ownership and your rights and responsibilities with regard to your business are going to vary depending on whether it’s an LLC, a sole proprietorship, or a corporation.
The third thing you need to know is that your business will be valued in a divorce, and you’re going to want to know and understand how it will be valued. Look, there are different reasons why businesses get valued and there are different methods of valuation in a divorce.
Generally, we’re going to be valuing it according to what a disinterested third party would pay for your business interest.
The fourth thing you’re going to want to consider are the tax implications. Now generally in a divorce, property transfers between spouses don’t have tax consequences, but when you own a business, there may be opportunities to shift some of the tax burden. And that’s something you’re going to want to pay attention to in a divorce.
The fifth thing you need to be thinking about is what I call formality fundamentals. You want to make sure you have observed all the formalities that are required of the type of business that you own. So for example, if you are required to file forms with the state, you want to make sure all of those are up to date. You want to make sure your personal expenses and your business expenses are separated and not commingled. This will help you protect your business ownership interest.
Finally, if you own a business and you are thinking about divorce, you need to sit down with an expert who can look into your business and talk with you about your unique circumstances and help you come up with a strategy to plan for the very best divorce possible.
As a divorce attorney, can I assure you that your business will not be negatively impacted by a divorce? I can’t, but I can tell you that every day we work with business owners, just like you, and help them move through the divorce process in a way that protects their business.
If you would like to learn more about how we can help you protect your business in a divorce, we’d love the opportunity to meet with you. Give us a call.