When you work hard to create a business over many years, the last thing on your mind should be how to ensure its longevity should your marriage end. But you need to consider it. Whether you’ve been married for many years or you’ve just popped the question, the thought of losing half of everything you have built in the event your marriage ends in divorce can be scary. The law has a tool to address these types of concerns and you’ve probably heard of it before, it’s called a prenuptial agreement, or a “prenup” for short. By having a prenuptial agreement and including your business in it, you can have peace of mind that the business you’ve built is your separate property, and not subject to equitable division in the event your marriage ends. You should also know that if you’re already married, you may create what’s known as a post-nuptial or anti-nuptial agreement. They work the same way as a prenuptial agreement, as explained below.
If you are considering asking a current or future spouse to sign a pre or post nuptial agreement, it's important to consider the unique aspects of your assets and business in order to protect your interests.
At the Glennon Law Firm, a well-informed client is our favorite kind of client, and we want to provide you with a few important considerations to think about as you contemplate whether a prenuptial agreement is right for you:
- Open Communication: Discuss your intentions and concerns about the business with your future or current spouse. It's important to have an open and honest conversation about why you want a pre or post nuptial agreement and why you want to include the business in one. Transparency can help build trust and ensure that you and your significant other understand each other's perspectives. Listening carefully is just as important as communicating clearly during this conversation.
- Consider Financial Contributions: If your current or future spouse will contribute to the business financially during the marriage, you may want to outline the terms and conditions of those contributions. For example, you can specify whether their contributions will entitle them to a share of the business or if they will be treated as loans. Each case is different, and we are here to help you decide the best route for your business and for your marriage.
- Non-Financial Contributions: In addition to financial contributions, it’s important to discuss any potential non-financial contributions your current or future spouse may make to the business. This could include providing support in managerial roles, offering ideas or expertise, or contributing time and effort. Determine how these contributions will be recognized and acknowledged.
- Business Decision-Making: Clarify whether your current or future spouse will have any involvement in the decision-making process of the business. This can range from having a say in major strategic decisions to being completely hands-off. It's important to align expectations and ensure that both of you are comfortable with your roles and responsibilities.
- Debt and Liabilities: Address how any existing or future business debts and liabilities will be handled. Outline that these obligations will remain separate from your spouse's personal finances and that your current or future spouse will not be held responsible for them in the event of a divorce.
- Future Plans: Discuss your long-term vision for the business and how it aligns with your personal goals as a couple. This is a blue-sky conversation – it’s your chance to dream together and form a lasting bond as you work in the coming years towards a shared goal. This conversation can help ensure that you both have a shared understanding of the business's future and how it may impact your lives together.
- Seek Professional Guidance: We are here to help guide you through this process. We have experience creating and litigation pre and postnuptial agreements for professionals, executives, and business owners. We will take the time to understand your unique needs and draft an agreement that meets your goals.
Remember, the goal of including the small business in a nuptial agreement is to protect your interests while fostering open and honest communication with your spouse. Working together to address these considerations can help you create a solid foundation for your marriage and your business.
If you are facing similar concerns or if you have questions about your Matrimonial situation, please feel free to contact us here. We have many years of experience handling such matters and will be able to assist you in addressing your questions.
To learn more about these topics, you may want to review our information provided on these pages: Matrimonial Law, High Net-Worth Divorce, Business Valuation, Prenuptial and Postnuptial Agreements, Business Litigation, Gray Divorce, and Protecting Businesses in a Divorce.