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How to talk to your business partner about a prenuptial agreement

On Behalf of | Apr 27, 2021 | Firm News |

When you and your business partner first started out, neither of you had much time or energy for anything but your fledgling company, including romance.

Things have changed since then, and your business partner has found the person they hope to make their mate — but you’re worried about the future and what could happen with your business if they later divorce.

Why your business partner’s marriage could be bad news

When people marry, they tend to commingle their assets — and that could leave your business partner’s spouse with a claim on your company if their marriage ends. Under the worst circumstance, you could find yourself in business with your partner’s ex-spouse instead of your partner.

A good prenuptial agreement can prevent that kind of thing from happening by:

  • Defining the business as your partner’s separate property
  • Defining any appreciation in the business during the marriage as your partner’s separate property
  • Require any transfer of interest in the business to your partner’s spouse (or ex-spouse) to be approved by all shareholders

In short, a prenup is absolutely essential when it comes to protecting your company’s future if your partner’s marriage doesn’t work out.

How do you bring up the subject of a prenup to your business partner?

Basically, the best thing you can do is be direct. You don’t want to make any kind of statement about your partner’s intended spouse that could be considered negative, so focus your wording around what the business needs. Some points you can bring up include:

  • You are equally willing to get a prenup from any future spouse you may have.
  • Without a prenup in place to protect the business, your company may have trouble finding investors or getting funding.
  • Your partner is still free to lavish their earnings on their spouse whenever they want — the prenup only protects the business assets, not what they take home.
  • A prenup can also protect their intended spouse by addressing the distribution of debt (so that their spouse doesn’t become liable for any debts taken on for the business).

If changes are coming to your business partnership, it’s often wisest to consult an experienced attorney about your plans. They can help you understand the available solutions for your problem.

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