Kajko, Weisman & Colasanti, LLP

Protecting your business if your spouse refuses a prenup

If you are a business owner, you may have taken the advice of many people who urged you to seek a prenuptial agreement before you got married. You may have approached your intended with the suggestion that you draft and sign such an agreement to protect your business, but the discussion did not go well. It is not unusual for a future spouse to reject the idea of a prenup.

Nonetheless, you have a business to protect. As committed as you are to your marriage, the cold fact is that about half of marriages end in divorce. By Massachusetts law, the appreciation or profits from your business during your marriage may become part of asset division. This could be detrimental to your business and may even lead to its demise. You may be looking for ways to preserve your hard work and success even if you don't have a prenup.

Being proactive

Ideally, you and your spouse signed a pre-marriage contract excluding your business and its profits from asset division, or you may have agreed to provide your spouse with a lower percentage of the value of the business in case of divorce. Without this document in place, however, you can still take steps to minimize the damage a divorce may do to your business, such as:

  • Pay yourself a fair wage from business accounts so your spouse cannot claim he or she deserves more money from the business.
  • Pay your spouse a market rate if he or she works or contributes in any capacity in your business.
  • Make sure your business documents name you as the sole owner and make the business non-transferrable in case of divorce.
  • Be diligent about records that show whether you used marital funds or premarital funds to establish and run the business.
  • Do not mingle business expenses with personal expenses or use your business accounts to cover personal items.
  • Scrupulously document every cash transaction to avoid the question of whether cash went to personal expenses.

Even with these safeguards in place, it is likely that if you face divorce, your spouse's legal team will scrutinize every aspect of your business to find ways to claim a portion of it. While you may want to ensure your spouse obtains a fair share of your marital assets in this case, you will also want to avoid any division that may damage your business. You may improve your chances by working with an attorney who has experience protecting the interests of business owners.

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