This is my next article in a series discussing the benefits of prenuptial agreements in Melbourne, Florida. My previous article addressed the ways in which a prenup can help protect married individuals from tax issues. The IRS could seize assets from community property of a couple if one spouse owes a tax debt and there is no prenup. It also pointed out how important it is to retain counsel for creating and maintaining these agreements. In this article, I will be discussing how an individual can utilize a prenuptial agreement for business purposes. Business assets, investments, and ownership stakes are handled with ease in the event of a separation. The prenup helps to avoid complications throughout marriage as well when seeking new business partners, obtaining loans, and investing. Contact my office to speak with a lawyer if you are a business owner and need help with a prenuptial agreement.
Florida spouses may find growing a business difficult without a prenuptial agreement
Growing and operating a business without a prenuptial agreement in place can be difficult both during a marriage and in the case of separation or divorce. An individual’s business could be left vulnerable to division if the spouses decide to divorce. One way this could occur is that the non owning spouse could have a legal claim to a portion of the business even if they were not actively involved in its growth. Investors and lenders may be hesitant to grant funding for the business if there is uncertainty about ownership or if a spouse or former spouse could become an unintended stakeholder in the business. Investors and lenders want to know who they are doing business with before offering financing and a prenuptial agreement can classify business assets under the owning spouse’s name. A divorce where one partner has significant business interests could become complicated and drawn out if the property’s ownership comes into question. The business could be subject to a forced sale if a prenup was never signed and the business is considered a marital asset.
Another way that business growth and operation could be difficult without a prenup is in finding new business partners. Consider this example: one spouse owns a successful business and wants to expand. To raise the funds to do so, they decide to sell 25% stake in the company to a new business partner. The original business owner retains 75% ownership while the new owner has 25%. The business owner’s spouse cannot assert a claim over the business in the case of a divorce if they signed a prenuptial agreement because the business is considered separate property. The spouse could argue that the business is a marital asset and claim a percentage of the business if the married couple did not have a prenup, however. Say the Court awarded the spouse 25% of the business. In this situation, the new business partner has 25% ownership, the original owner has 50%, and the former spouse owns the other 25%. The new partner now has to deal with two business partners rather than one and may have to endure conflicts in decision making. A prenuptial agreement could prevent such a situation which could lead to devastating impacts on a successful business.
Having a prenup does not mean that a Florida spouse is left unprotected
A common misunderstanding surrounding prenuptial agreements is that it leaves a spouse unprotected. However, these legal arrangements can be created with protections in place for the spouse while at the same time protecting separate property interests. An agreement could include spousal support provisions such as fair alimony or other support terms. This can ensure that a spouse has financial security in the case of a divorce. A prenup could also protect a spouse from being responsible for the other’s debts and tax liabilities, both personal and business related. An attorney can help draft a prenup that outlines shared property, how retirement accounts and investments will be handled, and ensure inheritance rights are in place for a surviving spouse. For example, a prenup could include a provision that one party agrees to provide spousal support for a period of five years if the marriage ends. The agreement protects the spouse that owns a business while providing financial certainty for a spouse who may not have the same level of income or assets.
Contact my office online or by telephone for an initial consultation. I am a Melbourne lawyer who is able to assist with your prenuptial agreement needs. My firm also services clients in the Brevard County cities of Titusville, Cocoa, Palm Bay, Grant, Valkaria, and Rockledge, as well as in the Indian River County areas of Fellsmere, Sebastian, Vero Beach, Indian River Shores, and Orchid.