How Does a Marital Agreement Affect Your Investments/ Business?
August 9, 2019 (Investorideas.com Newswire) By definition, a marital agreement implies any form of agreement between the two parties that form a couple, which involves the ownership and division of marital property.
Naturally, marital agreements are relevant as well as enforceable before one party files for the marriage's dissolution. This is one of the main reasons why you should know exactly how such an agreement might affect your property, business, and investments.
Understanding a Marriage
It's clear that two people marry because they're in love. In that moment, none of them thinks that their union might end up in a divorce. This is why most couples do not rely on any kind of marital agreement.
However, if you are the owner of a business, or invest your money into something that may turn out to be very profitable, then you have to consider marital agreements. You must remember that protecting your interests, even in the event of a divorce, is the most important thing to do if you want to avoid any issues and live a happy life.
Let's now see how a marital agreement, either prenuptial or postnuptial, can affect your business and investments in a company.
A marital agreement can influence your business in several ways. With it, you can determine whether your spouse will own any part or value in your business. Without a marital agreement, your spouse is considered to be directly involved in the building and operating of the business.
They may also be considered as indirectly involved, via the sacrifices that they make so that you can strengthen the business and increase its value. In short, once you get married, both you and your spouse are in charge of the company and its future.
However, you can set up some protection that can help you prevent them from getting something that they are not entitled to. In this respect, a marital agreement can help you in the following ways.
- Business as Separate Property - with a marital agreement, you can label your business/investment as separate property and, thus, not subject to any form of division. If you don't do this, then your business may be subject to invasive valuation. This is a costly and lengthy process that involves examining the books, interviewing employees, and inspecting the location of the business.
- Value Added After Marriage - you could also have an agreement specifying that any value that's added to your business after you get married will be considered marital property. You can also choose to limit your spouse's share, and have them receive a lower percentage compared to your other marital assets.
- Buy Out - if your business is an equal partnership, you can use a marital agreement to decide which of the spouses will have to buy the other out if a divorce occurs.
Depending on your relationship, you can also agree to continue working with your spouse on your business, and maintain the partnership.
Basically, the lack of a marital agreement can make your spouse entitled to half, or even more, of your business or investments which have been successful for you.
For example, instead of having to give them half of your company, you might rely on a marital agreement so that you keep full control of the business and, in turn, offer some payment to your spouse.
In any case, as the owner of a business or large investment, it is recommended that you consider a marital agreement before getting married.
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