Divorce can have a major impact on a business. This is one reason why many entrepreneurs who are happy and confident in their relationships opt for prenuptial agreements when choosing to tie the knot. Not only can a prenup protect an entrepreneur in case of divorce, but it could also help to make the business more attractive to investors, venture capitalists and others.
In the first place, a prenuptial agreement is a form of protection. It can lay out clearly what parts of the business, if any, will be considered marital property. A prenup can include a waiver of business interest and a stipulation that business shares given to an ex-spouse in a divorce settlement would need approval from other business partners. When an entrepreneur has partners in their business, those partners may be co-signers of the prenup as they also have an important interest at stake.
In general, a business that was created before a marriage would be considered separate property even without a prenup. However, the growth in the business’ value during the marriage may well be considered marital property. In a prenup, however, both spouses-to-be can agree that the property retains its separate character throughout the marriage, despite changes in value.
A prenuptial agreement can also protect the other partner. For example, it can prevent a spouse from being held liable for debts taken on for the business, including company debts. In order for a prenuptial agreement to be enforceable, both parties must be represented by a family law attorney. Each attorney would review the agreement carefully and advocate for a fair outcome for their client.