Which Is Best To Protect My Business–Prenup or Postnup?

You may have built up a successful company prior to getting married, or maybe you and your spouse went into business together. If your marriage does not last, your business might not either unless you have taken the necessary steps to protect it. At the Law Offices Of Cara L. Santosuosso, LLC we understand that, while no one wants to think about divorce at the time of marriage, it is an everyday occurrence that needs to be planned for. We can help you to ensure that whether you are unmarried but plan to be, or if you have been married for some time, your life’s work is secure.

What Are Prenup and Postnup Agreements?

Prenuptial and postnuptial agreements, often shortened to “prenup” and “postnup” are both agreements that spouses sign that spell out how property will be divided in the event of divorce or dissolution. “Nuptial” is a word rooted in Latin, as is true with many legal terms, and it refers to a wedding. The difference in these terms lies in when they are drawn up and signed. The prefixes “pre” and “post” are the clue–prenuptial agreements are signed prior to marriage, while postnuptial agreements are signed after marriage.

In essence, these agreements operate like a form of insurance for your business. They ensure that, in the event of a divorce, the business you have built–whether alone or together–is protected. Prenuptial and postnuptial agreements can lay out how all marital assets are handled in case of divorce or separation.

How Is Business Divided In An Ohio Divorce?

The obvious question now, is in regards to how assets–such as your business–are divided when you opt for divorce in Ohio. You might imagine that a business you started prior to marrying is obviously your personal property and asset, and that a marriage or divorce would not change that. However, that is now how marital assets are seen under law. 

In general, property in an Ohio divorce is divided using what is called an equitable distribution model. This simply means that a couple’s property is divided fairly between them as part of divorce proceedings, and this rule applies to businesses too. A business that was established before nuptials, or at least the increase in value obtained during the marriage, is likely to be considered a marital asset, and up for division. The processes for division will vary, but without a pre- or postnuptial in place, you simply cannot know how it will turn out for you and your business. 

Why Use A Prenuptial or Postnuptial Agreement?

Now that we know how assets are divided in an Ohio divorce, it is clear that business owners might want more control over how their hard work and investments are parsed out. What if one spouse built their company from scratch, saw success, and then had to hand over shares or partial control to an ex-spouse who was never involved in the company? So much could go wrong here, and all the effort put into growing and building a business could be undermined. However, with a pre- or postnuptial agreement already in place, you know that your business is secure, come what may. 

These agreements are not drafted with an eye on divorce as an ultimate inevitability. Instead, they are simply ways to ensure peace of mind should the worst happen, much like a life insurance policy. Both prenuptial and post nuptial agreements are a way to clarify and define business ownership and roles, making sure that you are both on the same page about your business from day one.

The best choice for you and your business will depend on your situation. If you already have a business established, and you are planning to get married, it is worth discussing a prenuptial agreement regarding your business with your prospective spouse. On the other hand, if you are already married and are either starting up a business alone or with your spouse, or if your spouse decides to join the business after some time, then a postnuptial agreement is the best option for you. 

Both types of agreements are good legal tools to protect your investment in your business; the right choice depends more on timing than anything else.

Collaborative Divorce Lawyers In Cleveland, Ohio

If you have a business or are considering establishing one, it is also a good idea to secure the future of your business with a prenuptial or postnuptial agreement. The time, effort, and investments you make to build, grow, and maintain your business could easily be undermined in the event of a divorce. No, divorce is not your goal, but the unpredictability of life makes these types of agreements a must, if for nothing else than your peace of mind. 

The expert legal team at the Law Offices Of Cara L. Santosuosso, LLC can help you and your current or future spouse to be on the same page from the start if you decide that divorce is the best way forward. It can be tricky to navigate this process, so speaking with an experienced Cleveland divorce attorney is a good place to start. Contact us today to learn more or schedule your consultation online.