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Protecting Your Business in Divorce: Legal Considerations in Plano, Texas

Divorce can be an emotionally challenging time for anyone. But for business owners, the process can be especially complicated and disruptive. If you're a business owner in Plano, Texas, going through a divorce, there are legal considerations you need to be aware of to protect your business and its assets. In this article, we'll explore the different legal aspects of divorce that can impact your business and provide strategies for how to safeguard your business during this difficult time.

Understanding Texas Divorce Laws

The first step to protecting your business during a divorce is to understand the laws in Texas. Texas is a community property state, meaning that any assets acquired during the marriage are considered joint property and are subject to division during a divorce. However, there are exceptions for property that is considered separate. This includes property that was owned prior to the marriage, gifts, and inheritances. In addition, if there is a valid prenuptial or postnuptial agreement in place that outlines property division, that will be taken into consideration during the divorce proceedings.

Community Property vs. Separate Property

In a divorce, it's important to distinguish between community property and separate property. If you started your business before getting married, and did not commingle business and personal finances, it is considered separate property and may not be subject to division during the divorce. However, if your spouse contributed to the business or helped manage it during the marriage, they may be entitled to a portion of the business's value. It's important to consult with a lawyer to determine what portion of your business is considered separate or community property.

The Role of Prenuptial and Postnuptial Agreements

If you have a prenuptial or postnuptial agreement in place, that will be taken into consideration during the divorce proceedings. These agreements can outline how property and assets will be divided in the event of a divorce, including your business. However, it's important to ensure that the agreement is legally binding and enforceable. A lawyer can review the agreement to ensure it's ironclad and can protect your business.

Business Valuation in Divorce Cases

During a divorce, the value of your business will be assessed to determine how much of it is considered community property. A business valuation can be complex and requires the expertise of a professional business valuation expert. They will analyze the financial records of the business, including income statements and balance sheets, to determine the value of the business. Having an accurate and up-to-date valuation is crucial to ensure that your business is properly protected during the divorce.

Strategies for Protecting Your Business

Once you have a solid understanding of the legal considerations, there are strategies you can implement to help protect your business during the divorce process.

Establishing a Business as Separate Property

If you want to establish your business as separate property, it's important to keep business and personal finances separate during the marriage. This includes having separate bank accounts, credit cards, and financial records. Additionally, any contributions made by your spouse should be clearly documented and accounted for. This will help ensure that the business remains separate property and is not subject to division during the divorce.

Creating a Buy-Sell Agreement

A buy-sell agreement is a legal document that outlines what happens to a business if a specified event occurs. This can include a divorce, retirement, or death. A buy-sell agreement can help protect your business by outlining how your spouse's ownership interest in the business will be handled in the event of a divorce. This can include a buyout provision or a requirement that ownership interest be transferred to a third party. It's important to consult with a lawyer to create a buy-sell agreement that is tailored to your specific business needs.

Paying Yourself a Competitive Salary

During a divorce, one of the main issues is determining how much income a business owner is making. If you are using your business income to fund your personal expenses, it can make it difficult to determine what portion of the income is attributable to the business. To avoid this, it's important to pay yourself a competitive salary for the work you do in the business, rather than using the business income to cover personal expenses. This will help ensure that the value of your business isn't artificially inflated or deflated during the divorce proceedings.

Working with a Divorce Attorney

When going through a divorce as a business owner, it's important to work with a lawyer who is knowledgeable about both family law and business law. A business-savvy divorce lawyer can help protect your business by identifying and addressing legal issues related to the business during the divorce proceedings. Additionally, they can help negotiate a fair settlement that takes into consideration the value of the business and how it will be divided.

The Importance of Hiring a Business-Savvy Divorce Lawyer

When selecting a lawyer, it's important to choose someone who has experience handling divorce cases involving businesses. They should have an understanding of business valuation, asset division, and the legal requirements for establishing separate property. By working with a lawyer who understands the legal considerations involved in protecting a business during a divorce, you can have peace of mind that your business interests are being represented effectively.

Collaborative Divorce vs. Litigation

During the divorce process, there are different ways to approach negotiations and settlements. Collaborative divorce is a process where both parties work with a team of professionals to reach a mutually agreed upon settlement. This can include lawyers, financial analysts, and mental health professionals. Collaborative divorce can be less adversarial than traditional litigation and can help preserve relationships between business partners. However, if a collaborative process isn't possible, litigation may be necessary to protect your business's interests.

Negotiating a Fair Settlement

The ultimate goal of a divorce settlement is to fairly divide assets between the parties involved. Negotiating a settlement that takes into consideration the value of your business is critical to protecting its assets. It's important to have a clear understanding of the value of your business and to work with your lawyer to negotiate a settlement that is fair and equitable.

Managing the Emotional Impact of Divorce on Your Business

Going through a divorce can be an emotionally draining process. Managing the emotional impact of your divorce on your business can help ensure that the business continues to operate smoothly throughout the divorce proceedings.

Maintaining Professionalism During the Divorce Process

It's important to maintain professionalism during the divorce process. This includes not sharing personal details about your divorce with employees or clients, and not using the business to retaliate against your spouse. Keeping personal issues separate from the business can help ensure that employees and clients maintain their trust in the business.

Communicating with Employees and Clients

Depending on the size and scope of your business, you may need to communicate with employees and clients about how the divorce will impact the business. It's important to be honest and transparent about what changes they can expect and how the business will continue to operate. Additionally, having a plan in place to address any operational changes can help alleviate concerns and maintain the business's credibility.

Seeking Support from Trusted Advisors

Going through a divorce can be a challenging time, both personally and professionally. Seeking support from trusted advisors, such as friends, family members, and mental health professionals, can help you navigate the process with greater ease. Additionally, working with a business coach or consultant can help you develop strategies to manage the business during and after the divorce proceedings.


Protecting your business during a divorce can be complex and overwhelming. By understanding the legal considerations, implementing strategies to safeguard your business, and working with a knowledgeable divorce lawyer, you can protect your business and its assets. Additionally, managing the emotional impact of the divorce on your business can help ensure that it continues to operate smoothly. With the right guidance and support, you can navigate the divorce process and come out stronger on the other side.

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