When starting a business, owners rarely think of marriage, let alone divorce. However, as life occurs, a person may go through an expected divorce and be left with uncertainty as to whether their soon-to-be-ex-spouse is entitled to part of their business.
Many people nowadays go for prenups before saying “I do.” A prenuptial agreement is made between two parties prior to their marriage to one another. While many view a prenup in a negative light, it can actually help strengthen marriages and ensure that, and if divorce happens along the road, arguments and conflicts can be avoided and your business will be protected.
1. Treating your Assets of the Business as Separate Property
Prenups, as decided and put into a legal agreement by both parties of a marriage, will classify assets as either separate or community property. Most times, premarital assets are considered separate property unless otherwise stated by the prenup. To protect your business in the event of a divorce, the entering parties can agree that each spouse’s salary will be that spouse’s own separate property. In addition, your prenup agreement can also identify any income you make from your separate property as separate.
2. Limiting Your Shared Debt
Debt can be a complicated aspect of divorce, especially for business owners. When you take out a loan while you’re married, the debt will usually be shared between the two of you. Even if you yourself took out the loan to invest in your business, it could be considered both of your debt and could be used to split the assets of the business, as both of you are technically indebted because of it. You should add to the prenup that you both choose not to assume each other’s debt during the course of your marriage. This could save your business from financial uncertainty.
3. Establishing Business Records and Income
It’s essential to have accurate and thorough records of your business transactions when you and your future spouse are entering into a prenup agreement and after you choose to divorce. Your records will establish your earning capacity and why your business should be a separate property by establishing how much your business made before and after the marriage.
Our experienced family law attorneys can help you enter into a prenuptial agreement that will hold up in court in the future as well as protect your business assets in the event of a divorce.
Contact our firm at 512-764-3932 to discuss your case today.