Divorce Estate Planning
Divorce Estate Planning in Texas
During a divorce, the last thing on a person’s mind is what might happen should they unexpectedly die or become seriously ill. You may be surprised to realize that your soon-to-be ex-spouse still has legal authority to make medical decisions for you until your divorce becomes final. Your parents or siblings would have to go to court to take control away from him or her.
If you die before your divorce is finalized, the divorce action will be dismissed and the person you were seeking to leave will control the disposition of your remains and all of your assets. This includes your business interests unless they were protected during the formation of your business.
You Can Protect Yourself During Divorce
One of the benefits of working one-to-one with an estate planning lawyer, not an estate planning computer program, is that you have someone on your side who is thinking about your welfare. Upon filing a divorce action, attorney Christopher Parvin can quickly prepare an estate plan that revokes prior plans and provides temporary protection for the duration of your divorce. (We can do this whether or not you use the law firm of Parvin Law Group, P.C., to handle your divorce.)
Business Succession Planning for Death or Divorce
Chris is Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization. Only approximately 1% of Texas attorneys have earned certification in this field. He is well prepared to address the unique challenges of business ownership and succession planning.
Texas is community property state. Each party owns half of the assets secured during the course of the marriage. This can include a business started by one of the spouses if money accrued during the marriage was used to start the business.
Unless the originating documents of the business (or a prenuptial agreement) clearly defined terms of business ownership that exclude spouses, a financial interest in a business is inheritable by a surviving spouse. There are steps you can take today to define spousal and family interests in the finances and operation of a business or partnership, with business succession planning.
Let’s take the example of a medical clinic with two partners, begun during the course of each doctor’s marriage. Each doctor owns 50% interest in the clinic, but because Texas is a community property state, in reality, each doctor owns 25% interest and each spouse owns 25% interest. Should one doctor die, the spouse inherits his/her 25% share and now owns 50% of the business, with decision-making authority.
Business succession planning allows the business owners to specify how that business inheritance will be handled.
- The company may be obligated to buy the deceased partners’ shares at an agreed upon value – fair market value, a lump sum, or over the course of years.
- An agreement may specify that the inheriting spouse does not have management or decision making authority over the affairs of the business and does not become a partner after the death of the business spouse.
These are two of the more common stipulations included in a business succession plan. Chris can help you consider other options that would fit your specific situation.
If you would like a review of your business documents so that you understand the risks to your business in case of divorce or death, contact our Dallas law office to schedule a consultation. Call (214) 974-8940.