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Business owners need a prenuptial agreement for protection

On Behalf of | May 7, 2020 | Firm News

Even though North Carolina is not a community property state, a certain portion of a business is at risk if a marriage ends. When someone owns a business before marrying, he or she might be taking a chance that he or she will have to give up some of the business if there is a divorce. A prenuptial agreement is a solution that can help manage this risk.

The prenuptial agreement essentially sets terms ahead of time for what the divorce agreement will look like. The settlement can state that the spouse who owns the business gets to keep it in its entirety. Alternatively, a prenuptial agreement could award a certain percentage of the company to the other spouse. A business may grow over time, and that could also be addressed in the prenup. Moreover, the agreement can even detail the new spouse’s role in the company.

The costs of not having this agreement will become apparent when a marriage ends. There will likely be bitter litigation. This will lead to high legal costs and an extremely contentious divorce. Investing some time and effort before getting married can help keep this from occurring. Even though spouses do not like to broach the topic of the marriage ending before it even starts, it is crucial when one person is bringing his or her business into the marriage.

Letting a family law attorney handle the drafting and negotiation of the prenuptial agreement is one way to reach an accord while still maintaining good relations with the prospective spouse. Prenuptial agreements can lead to hurt feelings before the marriage, so they must be handled with some acumen and tact. This is why spouses should not try to negotiate this type of agreement on their own. Obtaining legal help may make for a smoother process.