There are many misconceptions about the purpose or motive behind a prenuptial agreement. Such an agreement does not have to be an omen portending an imminent divorce, and in fact can actually foster a marital bond that accepts the pragmatic details of one or both partners’ financial concerns.
For a business owner whose operations preceded the marriage, it is wise to consider a prenup that will keep future profits or a commingling of finances related to the business from occurring down the line, which could produce headaches and unnecessary disputes.
How a prenup protects business interests
A prenuptial agreement can protect one or both spouses’ business interests in several ways. First of all, establishing the value of the business at the date of marriage protects this asset in the event of a divorce.
Provisions concerning the contributions of the other spouse can also be addressed in the prenup. For example, the other spouse may make direct or indirect contributions or have invested capital, or they may work in an unofficial capacity in the business. It is important to establish what that spouse’s role in the business will be, what level of compensation is fair, and where there is indirect compensation in the form of the other spouse staying a home to raise a family, if this shall be rewarded.
The business owner can also assign a percentage of the business to which the other spouse is entitled in the event of divorce as a way of preventing it from being sold or divided up in a divorce. The contributions of the owner to the business, especially if they are not taking a market-appropriate salary for their work for the business, can also be addressed in a prenup. In the event of a divorce, this cannot become a source of dispute if the owner was clear at the outset about the limits of his ability to contribute to marital assets.
Prenuptial agreements in Virginia
In Virginia, the laws concerning the content of a prenuptial are very clear and include:
- Rights and obligations concerning property
- Rights to control property, including to sell, buy, use, transfer, lease, abandon or otherwise manage property
- Spousal support
- Making of estate planning instruments
- Life insurance designations
- Any other matter
Being pragmatic in business as well as marriage can lead to a happier and more realistic marital arrangement. Having the nuanced input of experienced legal counsel serving Fairfax and surrounding areas can help couples to make informed decisions about marital agreements.