When you plan your wedding, the future looks rosy. Together, you anticipate a life full of love and happiness. No one is thinking about divorce or what it could mean for your small business – but they should be.
If you are a small business owner you may be concerned about the future of your business. Should your marriage end in divorce, will you have to sell it? Does your spouse have any claim to the business? The answers could depend on whether you have a pre-nuptial agreement.
Protecting your small business from divorce
Most people think that prenups are only needed when you are rich and you do not trust your future spouse. The truth of the matter is that signing a prenup now can protect your small business down the road.
Your business is an asset. In the event of a divorce, your accumulated assets must be divided in a fair and equitable manner, since Massachusettes is not a community property state. A pre-nuptial agreement allows you to state in writing exactly what will happen to your business and other assets.
What should my prenup contain?
There are several terms that should be specified in your prenup:
- Who inherits the business? Your prenup needs to list the name(s) of the person(s) who will inherit your business down the road. For most business owners, their children are the beneficiaries.
- Who profits from the business? Will your spouse benefit from the business finances and assets during the marriage?
- What happens upon divorce? How will the business assets be divided? Is the business to be solely yours or will your spouse be entitled to any part?
These are just a few of the issues that need to be addressed if you’re a business owner who is about to get married. Learning more about your legal options to protect your business is wise.