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When your business is a part of divorce property division-Part I

It is important for business owners to protect their assets from bad marriages. That applies to marriages in all states of the country, including in Tennessee. There are certain considerations that a business owner needs to keep in mind in case the marriage falls apart. In fact, it is sensible for the business owner to take steps to be protected even before the wedding. The first step to take is to draft a prenuptial agreement that outlines the details of property division in the event that the marriage takes a downward turn.

The prenuptial agreement deals with other aspects of asset division, such as alimony or property division, in the event that a spouse dies. That may also include the business owner's spouse's assets. However, what if there were no prenuptial agreements before the wedding? A likely solution to that is a postnuptial agreement. A postnuptial agreement is useful in a situation in which there could be a substantial change in the financial condition of one partner during the marriage. For example, if a business is heading toward a public securities offering, a postnuptial agreement can outline how property should be divided in case the spouses eventually divorces.

Also, if a spouse has children from a previous marriage, the partners may want a postnuptial agreement to help them to figure out how assets should be divided after death. The business owner should understand that just as purchasing life insurance does not predict death, a prenuptial or postnuptial agreement does not suggest that a marriage will eventually end.

Nobody wants to think about the possibility that their marriage might fail. However, people who are getting married should at least consider what would happen if things didn't work out down the road. This is especially true where one of the spouses is a business owner.

Source: Forbes, "Business And Marriage Do Not Go Together Like A Horse And Carriage," Steve Parrish, Aug. 17, 2015

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