On behalf of Kathryn Wayne-Spindler & Associates, PC posted in Property Division on Thursday, April 2, 2015.
When people who own professional sport franchises get divorced, it is common for them to fight with their soon-to-be exes over who will end up owning the team. However, these individuals usually have millions of dollars to spare during their legal battle over such assets. This is not true for most small business owners, which is why the family business can be a huge source of contention during a divorce proceeding in Michigan. So many ask, “Can a Prenup Protect Future Assets?”
One way a business owner can protect his or her business asset in the event of divorce is to sign a prenuptial agreement. This contract is signed before two people get married. Its purpose is to establish spouses’ financial and property rights in case they get divorced.
Prenup or Postnup protects businesses
Through the prenup, the business person can explain in advance which property will be viewed as marital property, which must be divided during a divorce, and what property is to be viewed as separate property. If the business designates the business as separate property, the business owner’s spouse cannot acquire an interest in it while the two are married. Even if two people are already married, they can still create a postnuptial agreement to protect their assets in the same way that a prenup would.
If two people did not create a prenup or postnup and end up getting divorced, it is still possible for them to try to negotiate asset division with each other. In cases where the two cannot agree on how to best split their assets, a judge must get involved and ultimately decide this for them. Both parties have the right to fight for what they feel is their rightful share of assets in Michigan.
Source: bizjournals.com, “How to protect your business in a divorce“, Patrick Yeatts, March 25, 2015