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Protect your business from divorce before you get married

Recently, a report was released stating that millennials are the most entrepreneurial generation in history based on the high number of people born between 1980 and 2000 with aspirations to start their own company. In fact, nearly one-third of them already have, according to the report.

This means that it will not be unusual for a young person to enter a marriage while already a business owner. If this sounds like your situation, you would be wise to understand that one of the best ways to shield your business from distribution in divorce is to protect it before you get married with a prenuptial agreement.

Your prenup can protect your business in a number of ways. For instance, your prenup can:

  • Define the business as separate, premarital asset
  • Address any appreciation of the business and how or if those assets will be divided
  • Protect interest in the business
  • Shield the business owner from the other person’s debt liabilities
  • Prevent business partners from suffering financial loss

Considering all the ways that a prenup can protect a business, it would be wise to take seriously the option of signing one before you get married. It may be uncomfortable or unromantic to discuss these matters with your soon-to-be spouse, but in the long run, completing this legal document can provide immeasurable protection.

It should also be noted that the non-business owner who is asked to sign a prenup can – and should – work with his or her own attorney to negotiate the terms of the agreement. Doing so can make certain that the document protects the interest of both parties.

With all that can be at stake with a prenup, it is crucial that you consult an attorney to ensure any agreement you do sign is fair, enforceable and effective. Failure to do this could leave you and your business exposed to California’s strict community property distribution laws.

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