Prenups and protecting a business in case of divorce

On Behalf of | May 5, 2020 | Blog, Child Custody |

Business owners in Florida who are getting married might want to consider a prenuptial agreement. This can specify how they will divide the value of the business in case of divorce.

The first thing a prenup can do is establish the business’s value before the marriage. This amount can be set aside as separate property. The value to be considered for division in case of divorce would be the amount the business appreciated. The couple might also want to agree on a method of valuating this appreciation if they do get a divorce. Otherwise, this process can be time-consuming and invasive.

In determining how much of the business the non-owning spouse is entitled to, a number of things should be taken into consideration. Factors include whether the spouse worked for the company, if the company was funded at any point from marital assets and what kind of salary the owner drew. A spouse who was paid market rates might have less claim to the business than one who was not. If the plan is for the non-owning spouse to stay home with children, there should be a way to value this contribution as well. If the owner spouse took a lower salary and this resulted in lower savings for the family, the non-owning spouse could be owed additional compensation.

Parents who have a prenup in place will still have to negotiate child custody and support since this cannot be addressed in a prenup. Some parents are able to reach an agreement without going to court. Negotiating an agreement can be less stressful than going to court, and it may set the stage for a more congenial co-parenting relationship after the divorce. If the case must go to litigation, a judge will attempt to make a decision that is in the best interests of the child.

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