You found the one! Is there anything you need to think about before saying I Do?
Business and marriage have a lot in common. They both require communication, effort and trust. If you are successfully operating a business now, and you are planning on getting married soon, you may want to think over a few things ahead of time.
Let’s talk about terms here:
Marital assets, broadly defined, include anything you and / or your spouse earn or accumulate during your marriage. It includes your wedding gifts, your earnings and your retirement. It also includes the interest in any real estate and any equity that is created.
Business assets are those things that belong to the business… so even if you work out of your home, it is quite likely that your laptop, phone and printer are all considered business assets.
The stark reality is that 50% of all marriages end in divorce. While none of us wants to face that possibility when we are getting ready to say I Do, if you own a business – and potentially are responsible to business partners, investors and for employees – you need to think ahead of time of all of the possibilities.
A prenuptial agreement is one way to solve this potential problem. A prenup can be as short or long as you want it to be. It can only address your business interests, or it can cover a multitude of financial areas. It can even go outside of the financial and business realm.
You should be prepared to indicate a number in the agreement of what your spouse would be entitled to in the event of divorce – or, you should be prepared that if you maintain all interest in the business, your spouse may end up with a greater percentage of the marital assets.
A prenup isn’t very romantic, but it is a practical way to address these concerns well ahead of any problem.
Most states these days are considered to be “no fault” states. Here in Indiana, when we file for divorce, we cite “irreconcilable differences,” a vague way of saying “we can’t get along anymore.” No fault also means though that it doesn’t matter if one person was cheating or the other was crazy or one has a drinking problem. None of those things matter ultimately in the divorce itself.
In divorce, the courts assume that the marital property will be evenly distributed, unless there is some evidence – other than fault in the marriage – to support otherwise.
So. That business you own now that generates 6 figures of revenue? In ten years, it could generate 7 figures annually. DO you want the value of that business to be divided as part of the marital pie? Do you want the business itself to be part of the marital pie?
If you already own a business, consider using a prenuptial agreement to protect your interest in the business.
(c) KJD Legal