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Prenuptial agreement essential when business partners divorce

Most couples in California may be apprehensive about discussing a prenuptial agreement. It is naturally difficult to consider or discuss a potential divorce while in love and excited about an upcoming wedding, starting a family and all the positive bits about a marriage. Unfortunately, the reality is that many couples get divorced annually, and it is important to prepare for such an eventuality.

This is even more important if the two parties in the upcoming marriage are also business partners. When such a marriage develops problems, the emotions associated with marital problems may negatively affect the business. Contentious divorce cases, especially those that attract public attention, may blemish the company's brand and negatively affect customer relations. The situation may even jeopardize the future success of the business.

The potential danger of losing the business may be prevented by negotiating and executing a prenuptial agreement that will protect both parties and the business in the event of a divorce. To avoid disputes at the time of the divorce, the agreement should specify the role each party will play in the business, and clearly define the decision-making powers of each spouse. It may be wise to obtain the services of an appraiser who is knowledgeable in the valuation of businesses.

California couples who are also business partners will want to avoid hiding assets, as this may risk the business and even bring about costly fines. Business partners who plan to get married may want to consider the potential of a subsequent divorce and explore the legal aspects of prenuptial agreements appropriate for the situation. Covering all matters that may be litigious in the agreement may result in the minimum damage to the business should the parties ultimately decide to go their separate ways.

Source: CNN Money, "Double trouble: When spouses who share a business partners split up", Brandon Southward, April 9, 2014

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