Baltimore & Towson Lawyer Discusses Marital Business Interests & Prenups.
Whether you are a new business owner or a well-established entrepreneur, you are probably consumed with ensuring the well-being of your business and keeping it viable for years to come. But what can happen to your business if something goes wrong in your personal life? All too often, business owners who are married never think about the possibility of divorce or how it may affect the business until it’s too late.
However, your Towson asset protection attorney knows the importance of thinking ahead, especially if you own a business. It is important for new and well-established business owners to understand that a divorce can be risky business for your business -- so consider protecting it with a prenuptial agreement (commonly referred to as a “prenup”).
Divorce And Your Baltimore County Business
Even if you were in business before you said, “I do,” it is crucial for you to understand that if your marriage deteriorates and you decide to go your separate ways, your spouse may still be entitled to half (or more) of your company’s appreciation in value (if any) that may have occurred during the marriage. Simply put, if your business was worth $3 million prior to the marriage, but it was valued at $6 million at the time of the divorce, your spouse could be entitled to half of that $3 million appreciation in value.
It is also important to understand that debt can be a problem as well, since after a marriage, spouses ultimately share each other’s debts. This means that certain creditors could possibly come after the assets of the business after the divorce is finalized.
Additionally, business owners should also keep in mind that a divorce will not only affect you and your livelihood, but it can also play a huge role in the livelihoods of any employees you may have at the time of the divorce. If you do not have a prenup in place, the results can be devastating for everyone involved.
Depending on the specifics of your situation, a divorce can mean that you will need to eliminate some staff and cut some business connections in order to stay afloat. However, such issues may have been avoided if a prenuptial agreement had been in place.
How to Protect Your Business With a Prenup
The key to protecting your business with a prenuptial agreement is making sure it is structured properly. That said, you and your soon-to-be spouse are encouraged to have a serious conversation before “going down the aisle” about each other’s assets and whether they are to be separate or marital property. True, it may not spark the romance, but it is a crucial conversation to have -- particularly if you want your business to last after a divorce.
That said, when drafting a prenup, make sure that the business’ appreciation in value is deemed as separate pre-marital property. Remember, prenuptial agreements are simply contracts between couples that clearly specify premarital assets as marital or separate. Simply stated, you and your spouse ultimately reach an agreement before the marriage as to what assets will be premarital and exempt from future division and which ones will be marital.
It is also just as important to ensure that your prenup limits your liability with respect to any debts incurred. The agreement should clearly state how the debts will be divided so there is no confusion in the event of a divorce.
Please note, however, that there are some limitations to a prenuptial agreement, especially if your spouse contributed to the business with their time and/or money during the marriage. Such contributions might actually change the character of the business to a marital asset.
Call (410) 321-4994 For a Free Consultation
Call The Law Offices of Amar S. Weisman at (410) 321-4994 to schedule a Free Consultation. The Purpose of the consultation is to determine whether you want to retain this law firm as your Baltimore County & Harford County Family Lawyer. If you do wish to proceed, then you must pay a retainer. See Our Policy on Fees and Costs. The family firm is located next to The Circuit Court for Baltimore County, at 1018 Dulaney Valley Road, Towson, MD 21204.
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