Addressing a business with a prenuptial agreement before divorce

| Apr 30, 2020 | Divorce

Requesting a prenuptial agreement could be contentious. However, for Indiana couples whose marriage ends in divorce, it can serve as a protective device. This is especially true when a business is involved.

If there is a business in dispute, the prenuptial agreement can detail how it is addressed in the divorce. Certain factors such as when the business was created, whether the couple wants it to be marital property or if they plan to keep it separate are all important. The business should be valued as of the date the couple got married. An increase in value after the marriage might be considered marital property, but the value of it before the marriage can be protected.

A significant factor is whether direct or indirect contributions are made by the non-owning spouse. That could mean having worked at the business or helping by taking care of the home. The way the business is valued could be specified in the premarital agreement so that an outside source is not needed to assess it. For some, the premarital agreement can have a specific percentage that will be given to the non-owning spouse if there is a divorce. That percentage will supersede any equitable distribution used with other marital property.

Finally, income should be factored in. The owner of a business generally does not take a salary that he or she would receive on the job market. This reduces marital property because it is not in a savings account.

Finances come to the forefront in many divorces, especially if there is a business at stake. A prenuptial agreement may assist in navigating these complex matters. To craft an agreement or to check its validity as part of a divorce, an attorney experienced in family law may be of help.

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