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Can a prenup protect my business?

by | Jun 29, 2021 | Prenuptial agreements

Getting married is exciting and joyful, but it can also come with a lot of stress. Combining households, funds and budgets is no small task. If you own all or part of a business, you may have even more stress than usual, worrying about how marriage could affect your business interests. You may find that a premarital agreement can help resolve many of your concerns, as well as protect your business partners or shareholders.

What can a prenup do?

Business interests vary widely and can be quite complicated under California’s community property laws. Although you may own your business outright going into the marriage, any contributions of your future spouse or comingling of business funds that happen during the marriage could turn your personal property into community property. Here are several ways a prenuptial agreement can protect your business in the event of divorce, disability or death:

  • Keeping your business interest separate from community property
  • Keeping your family business in your family
  • Providing your business partners with control over the management of the business in your absence
  • Controlling the profits or increased value of your business
  • Providing adequate credit to your spouse if they do make contributions, if you wish

 Making sure the agreement is enforceable

If you are going to go through the steps of creating a prenuptial agreement, you want to ensure you do it right. The point is to create a reliable financial plan for you and your spouse in the event of trouble. Your plan must follow certain legal requirements under California law. How and when you sign your agreement can also affect its validity. Make sure your business interests are clearly defined and described in the document, including any succession plans you and your business partners may have.

Although a prenuptial agreement does not replace a will or other estate planning documents, it does support your estate plan, which will help create a smooth transition and avoid conflict upon your disability or death.

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