What is a business prenuptial agreement and why do you need one? There is a long-held adage that you should never mix business with family. However, for many Americans starting a fledgling business, this isn’t an option, and there are many “family businesses.” A prenuptial agreement is made before marriage to help specify the ownership of assets and finances between both parties in case of a divorce or separation so that in the event of divorce or death, a clear understanding is provided to both parties as to what belongs to whom.
This helps ensure that each person’s assets remain separate and can be divided accordingly without any issues. Similarly, a postnuptial agreement serves the same function but is created after marriage. But let’s get back to business, your business. Most of us are vaguely familiar with the idea of a prenup, but what is a business prenuptial agreement (or biznup for short)?
A biznup is a nickname for a type of business prenuptial agreement or business postnuptial agreement which protects your business interests. This agreement is designed to protect both you, your business, your business partners, AND your spouse.
How a Business Prenuptial Agreement Protects You and Your Business
You need to be protected from losing the ownership stake in your business in a divorce. If you own a business, that business may become subject to division in a divorce. *Many states, including Texas, are considered community property states. This means anything earned or acquired during the course of a marriage is owned jointly and generally split evenly in the case of a divorce.
Your business should be protected from being interrupted in operation. Your customers deserve it and it is essential to maintain the goodwill associated with your business. From cash flow to decision-making rights, a business cannot grow or operate if these rights are the subject of a divorce proceeding. Or even worse, if the business interest is the primary value of the marital estate a court may order that the business interest be divided and given to the non-owner spouse.
Your business partner(s) likely decided to be involved in a business with you, not your spouse. Your business partners have invested in the business and don’t deserve to have their efforts impeded or interfered with by your romantic relationship. In the event of a divorce where the interest in a business is subject to division, a court has the authority to order forensic accounting evaluation, prevent access to the business accounts by the divorcing party, and ultimately even award interest in the business to your spouse.
You owe it to yourself, your business, and its customers, as well as your business partners, to protect your own, your spouse’s, as well as your business’s financial security. Many small business owners are motivated because of their passion to run and grow their business, not necessarily for the money it brings in.
How a Biznup Protects Your Spouse
How does this agreement protect you as a business owner as well as your spouse? These legally binding agreements get into the nitty-gritty of your business and what happens to it. Biznup agreements protect your business and business partners by ensuring that any assets or profits generated by your business will remain separate from those of your spouse in the event of divorce or death.
This also ensures that any disputes between you and your spouse will not affect the business operations and finances of your business partners. Biznups can include clauses to protect your social media accounts, separate the property of the business, and create a robust confidentiality agreement geared toward your business. You can get customized clauses in your biznup to address the needs of your specialized industry by speaking with an attorney.
We know opposites attract. Your spouse may not be the daring pioneer that you are. As a business owner, you will experience highs and lows. These lows can include going into debt, being sued, and even simple things such as being subject to regulations that individuals are not. A biznup can protect your spouse and their separate assets from being affected by business fluctuations. The best marriages can be shaken by a struggling business, but if your spouse becomes indebted due to your business decisions that create another level of risk and strife.
Many entrepreneurs are focused on creating a successful enterprise and forget to address the future growth and (hopefully) immense value of the business. So, what happens to your business? Will you now have to add a third partner and share owner to your small business? Can they start their own business using some of the assets and property of our company? Are you stuck running your spouse’s business now?
How an Experienced Lawyer Can Help with Your Business Prenuptial Agreement
A biznup ultimately protects your business, your partners, and most importantly your family. It’s an option every business owner should take very seriously. Are you thinking about starting your own business? Or maybe you’re preparing for a future partnership to carry on a family business? Either way, a biznup will benefit your future endeavors. It is important to have an experienced lawyer to help you draft and review this document as it can have long-term implications for your business.
An experienced lawyer will be able to provide advice on the best way to structure the agreement, ensure that all legal requirements are met, and make sure that all parties are satisfied with the terms of the agreement. With their expertise, they can help you create a legally sound prenuptial agreement that will protect your business in the future.
Don’t wait any longer – call us today and secure your business future together! You can view our different solutions by clicking here, our licensed professional attorneys will provide you the best service possible! Speak with an attorney in our office today to learn more about the benefits of creating a business prenuptial agreement.