Should We Get A Prenup If We Both Own Our Separate Businesses?
We all know that the odds of a divorce are about 50/50. With the chances of divorce being so high, many people turn to prenuptial agreements to protect their assets. A prenup is a contract entered into before marriage that ordinarily provides for a division of property should the marriage end in divorce. When two parties to a marriage each have their own businesses, a prenup can have its advantages.
Reduction of conflict
Entering into a prenuptial agreement significantly reduces the possibility of arguments over how various issues will be resolved. Those issues have already been resolved the document. With assets from the two businesses being properly handled, there should be no conflict as to which business belongs to which spouse.
The second time around
A prenup is particularly useful for those entering into a second marriage. They’ve had children and accumulated significant assets from their first marriage. One of those assets might be a business that children are now involved in.
To reinforce ownership in a business, a will or revocable living trust will reinforce the intentions of a spouse to segregate that business from the other spouse upon their death. That estate document coupled with the prenup agreement operates as additional protection for the business. The surviving spouse won’t become a business partner with the deceased spouse’s children or successors in the deceased spouse’s business.
A properly drafted prenuptial agreement can protect the parties from the business and personal debt each might accrue during the course of the marriage. Without a prenup, creditors of one spouse might seek to levy on assets of the other spouse through marital property laws.
A prenup is the most efficient and cost effective mechanism available for protecting business assets in the event of a divorce. It can save time and incredible amounts of money in litigation costs. It can also prevent a business from becoming paralyzed during the lengthy pendency of divorce proceedings and protect it from the other spouse’s creditors. Although entering into a prenup is ordinarily a personal decision, it might be a prudent business decision for two people that own separate businesses.