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Prenuptial agreement may help to protect business during divorce

People in New Jersey who start businesses usually do not anticipate getting divorced down the road. Unfortunately, divorce can have an adverse effect on a person's business financially, causing the business to die with the marriage. A prenuptial agreement created before marriage can help a person to safeguard his or her business's assets before he or she walks down the aisle.

In a prenuptial agreement, two people can spell out which items should be considered separate property and which assets should be deemed marital property in the event of divorce. However, it is also important to address debt in this type of legally binding contract. Limiting one's debt liability can be done by adding a provision stating that both parties agree not to take on one another's debts during the marriage. The agreement can also make clear how any debts incurred as a couple should end up being split during divorce.

Strengthening a prenuptial agreement is possible by maintaining all of one's business records. This applies to records of any and all business transactions both during and before the marriage. These records can help to establish a person's earning capacity prior to the marriage and provide justification for why the business's value should be deemed a separate asset.

Prenuptial agreements are helpful not only for business owners in New Jersey but also for those who have children from previous marriages, those who have sizable inheritances and those who have accrued substantial net worths. It is essential that a prenuptial agreement be drafted with both parties having separate counsel, as this makes the agreement enforceable and should prevent it from being voided. Proper legal guidance may help people to effectively draft prenuptial agreements that will protect their best interests in the event of divorce.

Source: business.com, "Divorce Is a Business Threat: Protecting Your Company With a Prenup", Erik Episcopo, April 1, 2016

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