The Importance of Prenuptial Agreements for Business Owners

As a business owner preparing for marriage, protecting your hard-earned assets should be a top priority. While it may seem unromantic, a prenuptial agreement is a crucial legal tool that can safeguard the business you’ve diligently built. Here’s why a prenuptial agreement is especially important for business owners and how you can secure your interests.

What is a prenuptial agreement?

According to Texas Family Code Sec. 4.001, a prenuptial agreement, also called a premarital agreement, is “an agreement between prospective spouses made in contemplation of marriage and to be effective on marriage.” Prenuptial agreements establish the rights, property, assets, and interests of each spouse in case a divorce occurs.

If you are already married but never created a prenuptial agreement, you have the option of obtaining a postnuptial agreement, which is a legal agreement that protects your rights, property, assets, and interests after you get married.

Why should San Antonio business owners consider a prenuptial agreement?

There are many reasons why a San Antonio business owner should consider a prenuptial agreement before walking down the aisle, including:

• It can protect your business: One of the most important reasons for business owners to consider a prenuptial agreement is to protect their businesses. This type of agreement allows business owners to clearly explain their expectations and wishes when it comes to their business during the marriage. This ensures that the business remains separate property and that the spouse who created or ran the business will retain it if a divorce occurs.
• It can help you understand the true value of your business: When you obtain a prenuptial agreement, you can gain a better understanding of the value of your business before marriage. You can also establish your expectations if your business increases or decreases in worth or value throughout the years.
• It can protect your spouse from any debts you may owe: By creating a prenuptial agreement, you can protect your spouse from any debts you may owe or accrue throughout the marriage. For example, if you take out a loan to remodel your business, your spouse can be protected from having to pay off the loan as it is part of your debts. You can also ensure that you are protected from your spouse’s (the non-business owner) debts.
• It can reduce your chances of needing to pay a lot in spousal support: If you do not have a prenuptial agreement in place, you may be required to pay a lot in spousal support in the event of a divorce. This is because your spouse may say that you own a business and have the finances to support them until they can get on their feet again. However, if you predetermine and put in place prospective spousal support arrangements, you can prepare for any possible alimony requests and ensure that your business does not suffer financially as a result.
• It can establish who will receive or inherit your business: Business owners who plan to pass their businesses down to their children, a business partner, or another family member or friend can explain this in the prenuptial agreement. Your spouse cannot dispute this decision if your prenuptial agreement clearly outlines who will obtain your business if anything happens to you or in the event of divorce.

How do I obtain a prenuptial agreement as a business owner?

If you are ready to obtain a prenuptial agreement, you should follow these three very important steps:

1. Hire a prenuptial agreement lawyer: A prenuptial agreement lawyer can help you learn about the prenuptial agreement process and what to expect. They can also inform you of various factors that you should mention in your agreement and ensure that it will hold up and be enforced legally in the event of divorce.
2. Begin discussing with your soon-to-be spouse: Openly discuss your financial expectations and goals with your soon-to-be spouse. This conversation is crucial for mutual understanding and agreement on the terms of the prenuptial agreement.
3. Schedule a meeting to create a prenuptial agreement: If you both are in agreement, you can schedule a meeting with your attorney to create the prenuptial agreement and start establishing all the details you want to be put in place.

After your prenuptial agreement is in place, you should remember to update it every so often. For example, if you have a child or your business partner leaves or passes away, you may want to change certain parts of your agreement.

What should my prenuptial agreement include?

Every prenuptial agreement is unique and different. Therefore, what you want mentioned in yours may be completely different than what someone else may want. Here are some recommendations that you should consider including in your prenuptial agreement as a business owner:

• What property should remain separate and what may become community property in the marriage.
• How income, debts, assets, and property should be divided or distributed in the event of death or divorce.
• Whether income, bonuses, or any other earnings are community or separate property.
• Expectations of alimony or spousal support in the event of divorce.
• Whether tax returns will be filed separately or married.
• Whether the spouse will work for your company and how much equity they may receive, if so.
• How much money the spouse may receive if the business increases in value.
• Whether the spouse will be a stay-at-home parent and receive equity for taking care of the children.
• If any new business ideas occur during the marriage, will they be considered separate or community property.
• Whether the spouse can make decisions regarding your business.
• How employees, business partners, or children will be protected in the event of divorce.

Are you a San Antonio business owner thinking about marrying and building a life with your long-time partner? If so, you may want to consider protecting the business and assets you were handed down from family or spent long nights building from the ground up before taking this big step. Even if you feel secure in your relationship and do not think divorce will ever be on the table, it is a good idea to still obtain a prenuptial agreement for peace of mind. The San Antonio prenuptial agreement attorneys at Grable Grimshaw, PLLC know and understand that it can be difficult to have these conversations, which is why we are here to guide you through the process and ensure that everyone is on the same page. While most people see prenuptial agreements as negative legal documents, they can actually be very beneficial to both partners. For more information, please call our office or submit our contact form to schedule an appointment with our team today.