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Home 9 Divorce 9 Businesses are community property in Texas divorces

If you own a business and think you are the sole proprietor, Texas law does not necessarily agree. Family law views a business as a marital asset in this state. If you are married and get divorced, that business becomes part of the community property equally owned by both spouses. That can make your divorce much more complicated, particularly if one spouse has virtually no contact with or interest in learning and running the business.

Businesses amount to marital property

“Marital property” is a legal term that refers to all income and assets that either spouse acquires during the marriage. Those assets also include stocks, bonds, other investment assets and business assets. If the business assets include shares in the business, a former spouse might suddenly become a business partner with equal say. In some cases, divorced couples wind up serving on boards of members in a business interest.

Ways to prevent businesses becoming marital property

Even if you own a business prior to entering into a marriage, Texas law would still view that business as a mutually owned family asset if a divorce were to occur. Fortunately for owners of businesses, they can enter into a prenuptial agreement that prevents an existing business from becoming mutual property. A postnuptial agreement made after the start of a marriage can also protect business assets from becoming the assets of former spouses.

Trusts and other legal tools protect business assets

Another good tool for protecting a business asset is to put it into a trust. Instead of the business becoming a marital property, the trust owns the business and protects it. An experienced family law attorney may help you to protect valuable business assets and ensure fair distribution if divorce occurs.

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