Family courts sometimes count a business that you started or acquired before marriage as non-marital property. For example, say a successful business owner decides to get married. It makes sense to believe that business property remains separate from marital property should the need for divorce arise.
The concept that a business founded before marriage is separate sounds simple enough, but it might not turn out that way in a divorce. Often, owning a business before marriage could pave the way for complex financial disputes to arise if the business owner and their spouse divorce.
How can owners protect their business during a divorce?
In most cases, a well-drafted prenuptial agreement can solve most of your problems as a successful business owner. A prenup allows you to address what happens to your business if you and your spouse cannot make the marriage work. A prenup can help by:
- Establishing the value of your business at the date of the marriage
- Establishing how to value your business if a divorce occurs
- Specifying what percentage of the business your spouse may get upon divorce
- Specifying whether you and your spouse will share in the business’s losses and profits after your divorce
- Specifying what happens to your business income if you get divorced
Prenuptial agreements can do much to protect you and your business while ensuring that your spouse receives a fair property settlement as well. If you are getting married and own a business, consider getting a prenup. If you are already married, a postnuptial agreement can address the same financial matters in most cases.