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Why business owners need a prenup

by | Apr 20, 2020 | Family Law |

The best way to ensure that your spouse doesn’t end up with a financial interest or decision-making power in your business if the two of you divorce is to deal with it in a prenuptial agreement before you get married.

Whether you already own a business when you tie the knot or are still in the planning or even dreaming stage, you can stipulate that it is to be considered your property and not marital property. If you don’t, a spouse who did nothing to build the business and has no interest in it could end up with part ownership of the business and the right to move it in a direction you don’t intend.

It’s essential to make sure that the prenup is drawn up by an experienced attorney and that everything is handled appropriately to reduce the chances that it could be thrown out in court if either of you challenges it. That means, among other things, that you are both completely honest and transparent about your assets and debts, you both understand the terms of the prenup and you both have your own attorneys representing your interests.

Even if you haven’t yet started your business, you can stipulate in your prenup that any business you start will be considered your property and not marital property. That means you’ll need to be careful about not putting marital assets in to the business and not involving your spouse in any way.

If you didn’t get a prenup before you married or didn’t address your business in your prenup, you may deal with it in a postnuptial agreement. Postnups can address the same matters as prenups. The primary difference is that they’re drawn up after you’re gotten married. If you’re drawing up a postnup to protect your business, it’s best to do it as soon as possible rather than wait until the business has been up and running for years.

If you didn’t address your business in either a prenup or postnup and now you’re considering divorce, you need to know what your options are for dividing it with your spouse or perhaps getting an agreement from them in the divorce that they won’t take a share of it. An experienced attorney can review those options with you.

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