When a couple in New York decides to marry, they do not often take an inventory of what each spouse will bring to the marriage financially. However, when a business is involved, it is important that a spouse takes the time to properly protect that business. This is often when a prenuptial agreement can really shine.
Why might one want to execute a prenup to protect their business? There are many reasons to include a prenuptial agreement in a marriage. When there is a business involved, there are three scenarios that may encourage a business owner to include a prenup in his or her marriage.
The first scenario is the fact that a business could be considered marital property. Having a business that started during the course of marriage will likely have it labeled marital or joint property. This is true even if the other spouse did not contribute to its creation.
The second scenario is having the business considered premarital property. If premarital property is mixed together with marital property, all of this could be considered marital property. Even if the business was started prior to marriage, without a prenup, the other spouse could be entitled to a share of the business’s appreciation experienced during the marriage.
Finally, without a prenup involved, a spouse could lose a lot of money attempting to retain ownership of his or her business. What influences the cost of divorce is the number of contested issues. The more contested issues there are, the more drawn out the divorce process will be. Without a prenup, it is unclear how a business will be treated and divided. Thus, a spouse will likely be fighting to protect his or her business, resulting in an expensive price tag on the dissolution process.
While a prenuptial agreement might not seem important or might be viewed as a minor technicality, it can sometimes become an extremely important and vital step to take. Therefore, it is important to consider how including a prenup in a marriage could benefit you. Additionally, it is vital to ensure that a prenup is properly executed prior to your marriage, so it can be enforced in the event of a divorce.