Many entrepreneurs in Dallas, before finding love, grow a successful and profitable business. So, when these individuals do decide to get married, one step they may want to take is to execute a prenuptial agreement, known as a premarital agreement in Texas, to protect the business they spent so many months or years cultivating.
In a premarital agreement, couples can decide whether they want the business to remain a separate asset, or whether it should become marital property. This is significant, because if a couple divorces, their marital assets will be split between them during the property division process. If a couple decides to execute a prenup that will include a business, there are certain steps they may want to take.
First, it is important to ascertain what the business is worth at the date of the couple’s marriage. This not only records what the business is worth as separate property, but also serves as a starting point for determining whether any increase in value the business sees during the marriage should be deemed marital assets. Similarly, in a prenup couples can decide whether they will share in the company’s profits and losses.
Prenups can also include provisions on how they will determine what the business is worth at the time of divorce. Some couples decide each spouse will retain a certain percentage of the company should they divorce, and this too can be included in the prenup. Finally, a prenup can detail how income made by the business will be distributed — will spouses get a salary that could be considered marital in nature or will the funds be kept as part of the business?
These are all important points to keep in mind if you are executing a prenup and own a business. However, this is only a basic overview of this topic, and does not provide legal advice on prenups or property division in your specific situation. Couples who need more information about premarital agreements and property division in Texas will want to seek the professional help necessary to have their questions answered.