Divorce can present a tricky situation for business owners, especially for those who didn’t start their business until after they were married. When your business started after your marriage, it has much more likelihood of being considered marital property, meaning during your divorce, your spouse may have a right to nearly half of the value.
If you’re worried about your business during divorce, you may want to consider a postnuptial agreement.
A postnuptial agreement – also called a “postnup” – is a legal document made after marriage to layout the specifics of what will happen to your assets during a divorce. Postnuptial agreements function similarly to a prenuptial agreement, offering you a chance to create guidelines regarding your marital and separate property.
Some benefits of a postnuptial agreement include:
- Protects your business and financial assets. Your business is full of your hard work and effort. You want to keep your business running without complications. If the business is in your name and you have kept the income separate from your marital assets, you may already be in good shape. However, a postnup can also help you and your spouse come to an agreeable solution of dividing proceeds if necessary. Or, you can figure out alternative methods of splitting the value, such as offering to give your spouse a higher share of other assets, so you can keep the business the way it is.
- Offers you control. A postnuptial agreement means you and your spouse can make decisions about your assets without a judge having to make them for you.
- Streamlines the divorce process. With a postnuptial agreement in place, when a divorce does happen, you and your spouse are already prepared. The decisions you made about your business will go into effect and make the divorce process smoother and less stressful. This means you can get through the divorce faster and return to focusing on your business.
A postnuptial agreement is an excellent choice if you started your business after marriage or if you don’t already have a prenuptial agreement in place. You can draft a postnup at any time – but it may be ideal to do sooner rather than later. Once you have the postnup in place, you can rest assured that in case of a divorce, your business will remain out of the hands of your spouse.