Many businesses in Texas are started by relatives or married couples. Other businesses may be started by an individual but with the hope that one day the business will be passed on to the founder’s children. These situations all require some smart, proactive and strategic planning in order to ensure the business continues to be properly managed.
As explained by Entrepreneur magazine, a prenuptial agreement can be a useful tool in a variety of situations. For couples who own and operate a business together, it may provide some protection for the business in the event that the couple divorces by outlining provisions for ownership of the company ahead of time. If one person owns a business alone and then gets married, a marital contract can identify the business as that person’s separate property.
A buy-sell agreement is an important way of outlining plans for continued operation of a business in the event that an owner dies or becomes unable to run the business unexpectedly. This type of agreement may also provide assistance in determining the value of a business.
Forbes recommends caution when expecting to transition a business to an adult child. Owners should carefully assess both if the adult child is truly interested in taking over the business and if that person is fully capable of running the business. Business succession should be planned well in advance with time to allow a smooth transition, ideally allowing the family member to gradually assume responsibilities to ensure continuity and success with the ultimate transition.