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Business owners need the protection of a prenuptial agreement

| May 25, 2021 | Prenuptial Agreements

Before the wedding, your business is your own, but after, it could gradually become your spouse’s property, as well. This happens through a process called commingling, where the assets and finances of the marriage help the interest in the business grow, and that growth belongs to both spouses. The risk of the business also belongs to both spouses.

You can use a prenuptial agreement, which Minnesota statutes call an antenuptial contract, to reduce financial risks to your business and your marriage.

Protecting your spouse’s assets

Even if you have structured your business to reduce personal liability, being in business always comes with some level of risk of financial loss due to creditors, lawsuits, bankruptcy or other disasters. If you have an antenuptial contract that separates your assets and your spouse’s, then his or her property would not be vulnerable for the troubles of your company.

Protecting your business from division

Your contract can protect your business from liability if the disaster were to befall your spouse’s finances. You can also specify that it remains intact if you and your spouse divorce someday. You would still have to divide all your marital assets fairly, so a judge may, for example, determine your spouse supported you when business was bad, so he or she should receive a larger share of the marital assets. Your business interest would be yours, though.

Protecting your marriage from conflict

Some people associate prenuptial agreements only with divorce, but Psychology Today notes that you and your spouse can use it to set an honest and open financial foundation for your marriage that enhances your relationship.

You can also include other promises to each other in your agreement, as long as they are reasonable, honest and legal.

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