How prenups can save a business when partners divorce
Californians understand the importance of planning for the future. Unexpected events such as divorce, however, can change even the most well-laid out plans for a couple’s future. And when that divorcing couple has created, owned or operated a business together, any business plans they made also must now adapt to new circumstances.
Fortunately, one option is available for couples who are about to enter marriage but want to protect their property rights and business assets: a prenuptial agreement.
People who become business partners or run their own businesses understand that divorce can easily harm a business. To prevent that from happening, a business owner should suggest a prenuptial agreement to his or her intended spouse. The agreement should outline the roles of both spouses in the company, establish what is separately owned property and provide a well-drafted documentation of business partnership.
Suggesting a prenuptial agreement is definitely not the most romantic thing a person can offer to a future spouse, but a well-drafted prenup can protect the best interests of the business, preventing it from being split down the middle in the event of divorce.
A prenuptial agreement can also provide a benefit by stating how property and assets will be divided if the couple decides to split, thus allowing a smoother transition.
Although spousal support and similar financial matters can be written into a prenup, child-related issues such as support, custody and visitation cannot be included.
Anyone can draft a prenuptial agreement, but it is important to fully understand the state laws that govern the agreement before writing one. Legal assistance can ensure that the agreement will be enforceable in the future. For this and related family law concerns, a person may want to consult with an attorney for sound advice.
Source: CNN Money, “Double trouble: when spouses who share a business call it quits,” Brandon Southward, April 9, 2014