You’re madly in love, you say? You’re going to be together forever, you say? Your fiance isn’t even interested in your business, you say?
So, why would you possibly need to sign a prenuptial agreement?
The fact is, as an entrepreneur, it may be irresponsible business ownership to neglect having a prenup that, at the bare minimum, addresses your company and whether or not your spouse will have any ownership rights if you get divorced.
What is a Prenuptial Agreement?
Prenuptial agreement is a contract signed before a couple enters into marriage.
[1] The contract addresses what will happen to certain aspects of the couple’s assets should they ever seek to dissolve the marriage, and can also be used to establish agreed-upon plans for other aspects of the relationship, such as whether retirement savings from before the marriage would be considered joint property or separate property. Additionally, it allows marry couples the chance to address various aspects of their relationship, financial or otherwise, prior to getting married to ensure they are on the same page. It is an exercise in healthy relational communication.
Prenuptial Agreements: Uses
Prenups can be used to protect a spouse who has more assets or income than the other. They are also used to ensure that certain assets are inherited by children from a previous marriage rather than going to a stepparent or children from a second marriage.
Prenups often get a bad reputation because some people believe that, by planning for what will happen if a divorce ever occurs, a couple who signs a prenup is setting themselves up for a failed marriage. This could not be further from the truth, especially if you own a business.
Consider this scenario:
You start a company and not long after you get married without signing a prenuptial agreement that addresses your company. You’ve been together for a number of years, and during that time your business is quite successful and grows significantly. You expand and add new employees and offices. Then, whether abruptly or over a long period of time, your marriage deteriorates. Your spouse asks you for a divorce. Now you must figure out how to divide your assets, and in Florida the courts will seek to achieve an equitable distribution of all shared assets. Certainly, since you owned the business before you got married it technically qualifies as a personal asset of yours that is not shared. However, the growth that occurred in your business while you were married is considered shared, and your soon-to-be-ex spouse will be entitled to half of it.
What will it mean for your business to lose half of it’s worth, or at least half of the gains that the company made while you were married? What will it mean for your business partners and employees?
Be a Responsible Business Owner – Postnuptial Agreement
The potential for a divorce when a business owner gets married usually impacts many more people than the owner alone, and by not protecting your business through a prenuptial agreement, you are exposing everybody involved in that business to unnecessary risk.
Many partnership and operating agreements even stipulate that an owner must have a potential spouse sign a prenup before he or she gets married. It does not mean the betrothed business owner is planning to get a divorce—it is simply responsible business ownership to plan for all potential outcomes, just as your business would in any other situation.
If you start a business after you get married you also have options for protecting your company in the form of a postnuptial agreement.[2] Thus, there are no excuses for any business owner not to protect his or her company from the possibility of a future divorce when he or she gets married.
If you own a business and you are getting married, you cannot afford to fail to protect your company’s future by signing a prenuptial agreement. For assistance in drafting a prenup that will suit your specific circumstances, please contact the law office of Muir & Associates today.
I own a business and I’m getting married. Do I need a Prenuptial Agreement?
Other articles: