October 16, 2019

The Importance of Prenups for Business Owners

Michigan newlyweds may not have a lot of money or other assets when they first tie the knot. However, this doesn’t mean that they won’t acquire assets in the future that they would like to account for. For instance, someone who starts a new company may want to claim ownership of it and protect any revenue generated while they’re married.

In addition to providing clarity for business owners, prenuptial agreements can help investors feel better about putting their money into a company. Venture capital firms will generally require that there are protections in place to safeguard their investments in the event of a divorce. Even if investors didn’t demand such safeguards, those who start companies generally feel a strong connection to their creations. In some cases, those connections are stronger than the ones that they have with their spouses.

Therefore, founders will generally try to structure a prenuptial agreement in a way that allows them to keep their companies in exchange for ceding control of other assets. It’s important to note that a prenuptial agreement in itself is not a guarantee that a divorce will end in a smooth and timely manner. A judge could void the terms of an agreement if it isn’t drafted properly.

The end of a marriage may be a disruptive time regardless of the types of assets a couple has. Therefore, it may be wise to retain the help of legal counsel when negotiating the terms of a divorce. Legal counsel could act as an objective party who attempts to craft a settlement based on state law and the facts in the case. Divorces may be finalized through litigation, mediation or with private settlement talks.