Prenuptial Agreements (Prenups) Do a Small Family Owned Business Good

Prenuptial agreements, or prenups, are highly recommended for owners of closely held businesses.

After all, the future Husband and Wife may not be the only ones impacted by a prenup, or lack of same. There may be children.

And there may be other extended family members also affected.

A prenuptial agreement is the only way of protecting the interests of all those other folks and the business itself, in addition to the actively involved future spouse.

For the faint-hearted future spouse uncomfortable with broaching the subject, there is a simple solution.

Incorporate the requirement of a prenuptial agreement right into the shareholders’ agreement or members’ agreement, or other business management documents.

This approach makes the prenup mandatory, but depersonalizes the issue.

After all, divorce of a principal is de-stabilizing to the entire business, and the threat of a fragmentation of a spouse’s ownership interest and rights threatens harmonious management.

A prenup can specify ownership, voting rights, valuation, buyout where appropriate, characterize property as marital or nonmarital by agreement, and provide for death of a future spouse as well as the possibility of divorce. As well as other issues.

Read more in this Delmarva [MD] Daily Times article: Business owners: Consider prenuptial policy.