Marriages are tough and over half of them end in divorce. When this happens things can get messy, assets are split up and things divided. This includes personal and business assets, as well as properties. Dividing retirement plans is a big part of divorce as well. It is a good idea to plan ahead for possible future problems when getting married. A prenuptial agreement will go a long way in preventing losses down the road. When couples get married they begin acquiring property and if business assets fall into this category then they may be subject to the divorce settlement.
The first thing to understand when trying to untangle the finances and properties of two married people is the difference between marital property and separate property. All states have slightly different laws when it comes to this territory but in general spouses are allowed to keep some property separate from their marital properties. This might include property owned before the marriage or an inheritance left solely to one spouse. This can become complicate or negated legally depending on how these items are treated during the marriage. For example, if one spouse owns a property but later puts the other spouses name on the deed, then it becomes a marital property. Likewise, if one spouse receives an inheritance but then puts it into a joint account, that money is now a marital asset. Everything else that a couple acquires during the marriage, regardless of how it is acquired will be considered marital property.
Protecting business assets in divorce
The single best thing an individual can do to protect business assets in divorce is to get a prenuptial agreement. This agreement will state that the business belongs solely to one spouse and is not up for negotiation in divorce. A little planning can go a long way in this department. It’s important to get a prenup from a specialist who has had great success in the past in drafting these types of agreements. This document will be signed by both parties, prior to the marriage, and should be strong enough to override rulings in most courts regarding community property or equitable distribution.
Prenuptial agreements are very complicated and contain a great deal of items. It’s important for each party to have their own lawyer look and the document before signing. This will help to make the document thorough and strong in court. The document should be in writing and have signatures from two willing parties. It should contain a list of all assets prior to the marriage and a plan for how to distribute them should a death or divorce occur. This should include provisions for your business assets and what will happen to them. Often times prenups signed one day before the wedding by a fiancé have been later invalidated in court. It should be thoroughly planned with input from both parties to insure it is accurate and fair. These agreements cannot be unreasonable and must be signed in front of witnesses. It is highly recommended that this be done with a notary to make it even more binding. Sometimes these signings are done in front of judges to make sure that neither party was under duress during the process. This is an excellent idea but is often reserved for exceptionally high-stakes situations.
Divorce can be a very unpleasant experience to go through. It can be even more unpleasant if you are not prepared beforehand with the proper documentation to keep your own personal and business assets separate. You will spend many years building and nurturing your business so spend the time beforehand to protect it from being lost or carved up in divorce.