While many people avoid thinking about a prenuptial agreement before they get married, these contracts are being used more frequently by couples to protect themselves and loved ones from unexpected situations.

When a business is involved, a prenup can be a vital tool — think of it as insurance policy — to prevent a contentious situation from occurring. A formal, mutually agreeable contract can spell out each spouse’s fair share.

What provisions are included?

A prenup is made before two people get married, while a postnuptial agreement happens after the marriage date. Both are formal contracts that can determine how a business is valued and how assets will be divided. It can include:

  • Whether the business is your separate property and not subject to division, which can prevent a lengthy, invasive and costly valuation of the company and its employees.
  • Whether value added to the company after your marriage will be treated as marital property. You can decide whether to limit your spouse’s share to a percentage lower than they will receive for other marital assets, which are equally divided in California.
  • Whether one spouse will buy the other out in case of a divorce if both spouses equally own the business, or you could also decide that you’ll continue to work together.
  • Address any other conditions you agree upon and structure it as you both see fit. But it’s essential to define and resolve each item clearly, so there is no confusion if you separate from your spouse.

 Pre- and postnuptial agreements can bring peace of mind

No one gets married thinking their relationship is doomed to fail. But many couples realize it’s better to protect future interests for themselves, their children and their businesses in the event of divorce. A family law attorney can answer your questions and explain how a contract can provide relief for happily-married couples.