Prenuptial agreements to protect business assets

Business owners in Texas who are not married might want to consider how marriage and a subsequent divorce could affect their company legally and financially. A spouse could be entitled to half of the appreciation in value of a company that took place during the marriage unless a prenuptial agreement provides otherwise.

A prenuptial agreement is a legal contract that couples sign prior to their marriage. The assets that each individual brings into the marriage are often classified as either separate or joint property in the document. In the event of divorce, any assets that were designated as separate will be the sole property of the original owner. If one spouse owns a business prior to marriage, classifying it as separate property in a prenuptial agreement could prevent the other spouse from being awarded half of its appreciated value in the property division stage.

Debt is another issue that can be clarified in a prenuptial agreement. Generally debts are shared during a marriage and will likely be divided during the divorce. A prenuptial agreement could prevent this by including a provision that the parties will be responsible for their own debt if the marriage ends.

Protecting a business through the use of prenuptial agreements sometimes extends to others involved in the company. Some small companies make it mandatory for single partners to sign a prenuptial agreement before they get married.

Family law attorneys will remind their clients who are considering entering into such an agreement that negotiations should take place well before the wedding day. This could prevent a later challenge to the agreement by one of the parties based upon coercion.