Business owners dedicate countless hours to building their empire and accumulating wealth. If a marriage is on the horizon, a prenuptial agreement with a soon-to-spouse may be a valuable tool for protecting a business entity in the event of divorce.
Below are some key considerations when it comes to drafting a prenup.
Protecting business assets
One of the primary reasons business owners should consider prenuptial agreements is to protect their business assets, particularly if the business has been active for generations. A prenuptial agreement can outline exactly what will happen in regards to the business and its assets in the event of a divorce.
Clarifying ownership and management
A prenuptial agreement can also clarify ownership and management of the business. This can be especially important if one spouse is actively involved in the company and the other is not. The agreement may outline decision-making, profit distribution and, if necessary, logistics regarding the sale.
Protecting intellectual property
Intellectual property is often a valuable asset for business owners, especially those operating in specific industries. A prenuptial agreement may protect the rights to patents, trademarks, copyrights and other intellectual property in case of divorce.
Considerations for family business owners
Family businesses may require special considerations when it comes to prenuptial agreements. A prenuptial agreement may outline how family members may inherit shares of the company or how non-family members may become involved in management or ownership in the future.
Updating the agreement
Ideally, a prenuptial agreement will never need to come into play; however, business owners should consider reviewing the agreement regularly and with the agreement of their spouse, amending it as necessary to reflect changes in the business or personal circumstances. This may include but is not limited to changes in ownership, management or assets, or changes in family relationships.
A prenuptial agreement can be a valuable tool for business owners. With proper planning and preparation – and help from a family law attorney – it can can provide peace of mind and help to avoid conflict.