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Protecting Your Texas Small Business with a Prenuptial Agreement

The Law Office of Cassandra R. Noel April 28, 2023

If you're a small business owner contemplating marriage, protecting your business from the potential impact of a divorce is likely a top concern. A prenuptial agreement (prenup) can be an effective tool for safeguarding your business interests. In this article, we'll explore how a prenup can help protect your small business in Texas.

The Risk to Your Business

In Texas, a community property state, assets acquired during a marriage are typically considered joint property and are divided equally in a divorce. This can include a business, even if one spouse had no direct involvement in its operation. If your business increased in value during your marriage, that increase could also be considered community property.

Without a prenuptial agreement, your business could be subject to division in a divorce, which could disrupt operations, force a sale, or result in your ex-spouse becoming an unwanted business partner.

How a Prenuptial Agreement Can Help

A prenuptial agreement is a legal document that outlines how assets and debts will be divided in the event of a divorce. It allows you to specify that your business is separate property, protecting it from division.

Here's how a prenuptial agreement can protect your business:

  1. Separate Property: The agreement can specify that your business is your separate property, not subject to division in a divorce.

  2. Value Increase: The agreement can state that any increase in the value of your business during the marriage is also your separate property.

  3. Income: The agreement can specify that income from your business is your separate property.

  4. Debts: The agreement can protect your spouse from being responsible for business debts.

Creating a Prenuptial Agreement

Creating a prenuptial agreement should be done with the help of an experienced family law attorney to ensure it's legally sound and enforceable. Here are some steps in the process:

  1. Full Disclosure: Both parties must fully disclose their assets and debts. Hiding assets can result in the agreement being invalidated.

  2. Fairness: The agreement must be fair and not heavily favor one party over the other.

  3. Independent Counsel: Each party should have their own attorney review the agreement.

  4. Voluntary: The agreement must be entered into voluntarily. Any sign of coercion could invalidate the agreement.

  5. Timing: The agreement should be completed well before the wedding to avoid claims of being rushed or pressured.

Protecting your small business with a prenuptial agreement can provide peace of mind and stability for your entrepreneurial endeavors. At the Law Offices of Cassandra R. Noel, we're committed to helping small business owners in Texas protect their hard-earned assets. If you're considering a prenup, contact us today to learn more about how we can assist you.