Small business plays a significant role in the economy of New Jersey and around the country. Many of these companies are started by people prior to marriage as many are waiting until later to marry. While the divorce rate does appear to be on the decline, there is still a significant risk of one’s marriage ending in divorce. In the event that this happens, what becomes of the business?
Prenuptial agreements can be a powerful tool in protecting a business in the event of a divorce. While a business founded prior to marriage is not automatically marital property and so subject to asset distribution, a contribution by the spouse to the perceived value of the business can turn the business into marital property. Courts typically rule that contested property is marital property.
A prenuptial agreement can specify what rights a spouse may or may not have to the business that existed prior to the marriage. In addition, the prenup can be used to determine the split of business assets in the event of a divorce. This allows for fair and equitable treatment of a spouse who contributed to the success of the business during the couple’s married life.
No one enters into marriage with the anticipation of divorce, but it can be advantageous to think ahead and use a prenuptial agreement to protect one’s assets. A person contemplating marriage in New Jersey who owns a small business could benefit by taking proactive steps to protect his or her investment and hard work. A consultation with a knowledgeable family law attorney can provide valuable information regarding such protection.