Estate Planning for Business Owners Before Divorce: Protecting Your Assets
Estate Planning is Frequently Overlooked in Divorce Planning
In most divorces, the focus is placed on who gets what and who lives where. Divorce and custody strategy focuses primarily on the needs of the children and the spouse named as the primary parent in need of child support and maintenance. Property division is relatively straightforward and gets complicated when there are multiple vacation and investment properties.
People looking at the basics of divorce often use the assumption the people involved are employees with regular pay periods and compensation packages. In many parts of the country, the default is simple. But in Southlake, Texas, and our surrounding areas, many people are highly compensated and have business interests. In many local divorces here, both spouses are self-employed and have complex business interests.
Attorney Leslie Barrows and her team at the Barrows Firm in Southlake, Texas are available to help you learn more about Estate Planning and research into your rights and options in a divorce or child custody matter. Call today to schedule a consultation (817) 481-1583.
If your business has several partners, stakeholders, investors, employees, properties, and contractual options, each of these issues can lead to high stress in a divorce situation impacting the business. What if you have an obligation to fund an investment by a certain date and you get surprised by a spouse filing for divorce, your liability in the business could be more dire than that in any divorce court - you may have big decisions to make.
In this article, we offer you several things to think about if you are interested in terminating a marriage, either now or in the near future. Year-end financial considerations in business are important for review. You might find yourself in a situation where it might make more financial sense to delay the filing of the divorce, depending on how it is going to affect your finances. It is smart to get a full divorce and business analysis ahead of time and determine what makes the most sense.
In two decades of high-net-worth divorce litigation in Southlake and the surrounding areas, Leslie Barrows and her team at the Barrows Firm are well-experienced in navigating the complex issues business owners face in protecting assets and estate plans before and after divorce. The more you understand your rights and options before you file, the better you can drive the strategy to reach the goals you need to achieve.
Some Recent Past Holiday Articles from the Barrows Firm:
- Top Five Christmas and Holiday Visitation Tips for Parents
- Deck the Halls with Blended Families: Texas Estate and Legal Considerations
Listen to Our Recent Podcast About Protecting Business Assets in a Texas Divorce
5 Items to Check Before You File for Divorce:
- Update Your Power of Attorney - The last thing you want is for your ex to have the power to pull the plug or make medical decisions.
- Making or Changing Your Will - You can decide to change your will at any time, and your attorney will advise you whether there is a strategy issue that makes this attractive.
- Modifying The Terms and Provisions of Your Trusts - Someone who may have been a beneficiary of your trust before a divorce, could be written out. Your own distributions to yourself could be locked down and protected before you file.
- Reviewing Prenuptial and Postnuptial Agreements to Identify Exposure - If these agreements are determined to be enforceable, how will it affect everyone involved, including yourself, and will it hurt more than help?
- Strategy for What Can and Cannot Be Changed Before or After the Divorce - Once a divorce petition is filed, you are not as free to do what you wish with assets and funds because the Court orders a status quo to prevent wasting marital assets. Know what is going to happen before you file.
Protecting Business Assets Before or After Marriage with Prenuptial and Postnuptial Agreements
Smart people with generational wealth and education have the talk about money well before an engagement. A prenuptial agreement can be executed before a divorce, and a postnuptial agreement can be after the marriage but before a divorce. The parents of the young couple are appropriately involved and consulted so everyone knows where they stand if things don’t work out.
Especially in Dallas, we have very high divorce rates and a prevalent culture of people marrying up for money and status. Yes, it’s gross. Yes, it happens. And even the most astute people can be fooled by emotion.
You can and should have an agreement with full disclosure of assets and liabilities before marriage so the couple can determine what happens in the event of a divorce. Property and money can be addressed.
What’s not covered by prenuptial and postnuptial agreements? Child custody and child support are not determined by these agreements. The best interests of the children are determined at the time of divorce. The amount of child support is also determined at the time of divorce. You cannot contract around child custody or support with pre or post-martial agreements.
How Your Assets Are Categorized And Maintained
Texas is a community property state. Assets acquired and income earned during a marriage are community property subject to equitable distribution, and that means, in most cases, the spouses are entitled to equal distribution. If you want to keep business income and business interests separate, especially if the source of funds that created them comes from separate property, that has to be preserved and proven.
End-of-Year Estate Planning, Especially if Contemplating Divorce
If you're a business owner considering divorce, creating a pre-divorce estate plan can protect both your personal and business assets. Having your trusts and business interests evaluated annually helps us determine where we’ve been and where we’re going with our money.
End-of-the-year estate planning makes sense for divorce in the new year. Finding out the impact of selling jointly held stocks, for example, can be a game changer. Being prepared to buy the other spouse out of interests may require you to come up with liquid cash, and figuring out the best way to do that is important.
Use Our Pre-Divorce Checklist Here on Our Website
Find the link to the Barrows Firm’s Divorce Guide, a pre-divorce checklist that helps you start identifying the issues for development and discussion with Attorney Leslie Barrows. You can schedule a consultation today by contacting the Barrows Firm through the website or calling (817) 481-1583.
