According to the United States Census Bureau, 90% of American businesses are family owned. While this is a wonderful statistic for the nation’s economy, it can play a difficult role in a marriage. Many people enter marriage with optimism and dreams, but if those dreams turn sour, your business is safer if you put a prenuptial agreement into place before the wedding.
Take, for example, Bradley Smith. He is a third-generation owner of several hardware stores in his region. The stores do incredibly well due to the city’s campaign to “shop local.” With the history, growth, and continued success, Bradley knew he had to ask his future bride, Amy, to sign a prenup.
The only hit the company had taken in the past was when his brother’s wife filed for divorce. She worked for the business and it made their finances difficult to divide. In the end, without a clear prenuptial agreement protecting the business, the company ended up paying the ex-wife a settlement. Bradley wants to make sure the same thing doesn’t happen in the unfortunate event of a divorce.
Can a Business be Split Without a Prenup?
You may be wondering, what would happen to my business if I didn’t get a prenuptial agreement? Here is a brief look at some potential issues:
- Your business could be cut in half. If your spouse works with you, or becomes a “partner,” even if it isn’t official, you may end up having to split your business during the divorce.
- You may have to buy out your spouse. If your spouse helps with or partners in the business, you may end up having to buy them out to retain it, even if you were the one that started it.
- You may spend more on the divorce. If who did what isn’t clear, you may spend more time and money clearing up things. This may require forensic accountants and other professionals.
- You may owe contributions. Did your spouse give money or labor in any sense? Did you receive more shares during your marriage? Over time, this may end up costing you.
Safeguarding Your Business
A prenuptial agreement can help safeguard your business on multiple levels. It can specify who will continue to run it in the event of a divorce. It can also identify what business interests your spouse can claim.
Even if you don’t foresee divorce, clearly spelling out who came into a marriage with what can be beneficial. It gives you and your spouse an opportunity the communicate and look out for each other. As time goes on, you can adapt or change anything as long as both partners agree to the revisions.
Prenuptial Agreement Assistance
A prenuptial agreement may not feel like an ideal task to complete before marriage. However, two partners that love and trust each other will be able to have open discussions to sort through their assets and liabilities. Contact Ogborne Law to discuss a prenup today.
Engaging with an attorney to protect your family is never an easy step. Whether you need to protect your family from the unthinkable or restructure your family through collaborative divorce, we’re here to help. When you’re ready to schedule a consultation with Michelle Ogborne, please visit the scheduling page to get started.