posted in Prenuptial Agreements
on Tuesday, September 20, 2011.
Those in charge of a family-owned business can be hit hard during a divorce if they are not careful. The division of property that comes with divorce can cause a severe financial loss for the spouse that came into the marriage with ownership of a business. That is why many financial advisors suggest a prenuptial agreement for individuals that own a small business.
Roughly 90 percent of businesses in the nation are owned by families, according to the Small Business Administration. That means that individuals in Connecticut can easily be affected by the possible effects of not having a prenuptial agreement.
With no-fault divorce now legal in every state, either spouse can file for divorce without any specified reason. A sudden and unexpected divorce can catch business owners off guard and potentially cause them to lose a large portion of their establishment to a soon-to-be ex-spouse. Even though it can be a financially sound route, many small business owners do not have a prenup.
A prenup allows a couple planning to get married to determine what property will be and will not be divided at the time of a divorce, if it ever happens. This means that the family-owned business that has been passed down from generation to generation can be exempt from any sort of property division, if appropriately addressed in the prenup.
If a prenuptial agreement was not met before the marriage, the business has the potential to be cut in half. Working with an ex-spouse as a business partner could present certain difficulties in the future. In order to avoid this, if this option does not seem viable, every business owner should consider creating a prenup before the wedding.
Source: Forbes, “Divorce Doesn’t Have To Kill Your Family Business,” Eric Savitz and Charley Moore, Sept. 2, 2011