Importance of a Prenup When One Spouse Owns a Business

 Posted on May 26, 2014 in Prenuptial Agreements

Dividing up marital property and assets during a divorce can become difficult if one of the spouse's owns a business. That business may be one of the most important assets in the marital estate, especially if it is a successful one. Ideally, if the business was started before the marriage, the couple should draw up a prenuptial agreement that includes specific details regarding the business in the event of a divorce. However, if a prenuptial agreement is not drafted, a divorce could become increasingly difficult and potentially financially disastrous for one spouse or the other if the marriage fails.

For example, one couple going through a divorce, did not have a prenup, and thus put the husband's corporation at risk. Shareholders were left to wonder what would happen to the company. Said husband is currently worth $14.6 billion and is listed in Forbes Magazine as a global billionaire. He also owns 126 million shares of his company, giving him 70 percent ownership.

The judge overseeing the divorce stated that just over 122 million of the shares the husband owns were acquired prior to his marriage and are therefore considered "pre-marital property" and will not be part of any property division settlement. However, the remaining 4 million shares will not be covered by the judge's order.

Had the judge decided that the wife was entitled to half of the 126 million shares, since the couple did not have a prenup, the results could have been financially disastrous for the husband. In fact, he could have lost controlling interest in his company. With that said, drawing up a prenup when you have a successful business prior to marriage deems essential.

Although it may not seem the most romantic while planning your wedding, consulting with an experienced Austin family law attorney to draw up a prenup should be right on the top of the wedding planning list. It is especially critical to have a prenup if you own a business, are wealthier than your spouse-to-be, or have a much higher paying job. Contact an attorney at Powers and Kerr, PLLC today.