Marriage and business certainly have many common characteristics, especially when they are coming to an end. If an entrepreneur is facing a divorce, however, the last thing he or she may want is for the business to get caught up in the division of assets. This could easily mean the demise of an enterprise he or she has labored to build. Nevertheless, without taking precautions, Texas business owners may find themselves facing business valuation and the division of their hard-earned assets during a divorce.
One of the most practical ways business owners can protect their interests is to have prenuptial agreements to clarify the ownership of business assets from the start. In lieu of this, business owners can still take steps to protect their interests by scrupulously separating the assets and expenditures of the businesses from the family accounts. Additionally, entrepreneurs who restrict their spouse’s involvement in the business may have an easier time protecting their assets than those who employ their spouses or include them in the operations of the company.
However, if an entrepreneur is already facing divorce without these safeguards, he or she will likely need a business valuation. Sometimes couples can agree on a value for the business, for example using the book value. However, in many cases, a professional will be required to assess the market value of the business. With the value of the assets determined, the couple then must face the task of dividing the assets according to Texas law.
Having the knowledge and experience of a family law attorney will prove advantageous to a business owner going through a divorce. Business valuation requires a strategic approach to ensure that the assets are fairly assessed. An attorney can also offer advice for alternative strategies to protect one’s business during asset division.
Source: inc.com, “How to Protect Your Business in Divorce“, Rosanne DeTorres, May 25, 2017