Saturday, June 2, 2007

Got a business and no prenuptial agreement?

I have gotten to really like The Riches on FX. Minnie Driver and Eddie Izzard play con artists taking over a dead man's life - the dead man being a lawyer. The lawyer works in a real estate development company. Actually, he is now a partner to the rather coarse owner of the company. Owner disappeared and returned last Monday night with a bride - a dancer from Las Vegas. No, the show is not for the faint hearted. Owner wanted a prenup from the wife. What ensued was a rather interesting discussion of prenups, their purposes, and marriage.

When remarrying, small business owners need to think hard about prenuptial agreements. Divorce means dividing half the property and a business is property. The Los Angeles Times has an article, Parting Company, in its May 22 edition.

Prenuptial agreements, experts agree, are the best way to prevent a small business from becoming part of a messy divorce. Properly crafted, they will protect a company from being split up or loaded with debt used to buy out the other spouse. This is especially true in California, where community property laws dictate that everything acquired during a marriage belongs to both spouses no matter who did the work.

"A prenuptial agreement is one of the best things people can do for themselves," said Ben Martin, an attorney who advises entrepreneurs at the Small Business Development Center at Loyola Marymount University, which offers free counseling.

The article mentions post- marriage agreements. These are as difficult here in Indiana as they appear to be in California but not impossible.

Reaching the decision to make this kind of agreement is the truly difficult part about these type of agreements. The personal, emotional issues have the real possibility of leading the business to ruin.

Like so many things legal, prenuptial agreements possess a double edge. The agreement protects both parties. The bride in The Riches came around to the idea of a prenuptial agreement when it was pointed out to her that the agreement was a negotiation and all of marriage was a negotiation. I really like this description of prenups and marriage.

So, you own a business and no agreement in case of divorce? Why is that, again?

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