A Prenuptial Agreement Can Protect Your Business Succession Plans
Family-owned businesses are the backbone of the American economy. Some 90 percent of all businesses are family-owned or, at the very least, controlled by the families who started them. Many owners of family businesses look forward to the day that they can turn over the day-to-day operations to the next generation, never even considering how a divorce might wreak havoc on their professional and business-related plans. If you are a business owner who is thinking about getting married, you may want to execute a prenuptial agreement to be sure that your company is not affected by a potential divorce.
Marital or Non-Marital Property
According to Illinois law, if you own a business prior to getting married, your existing interest in the company will, in most cases, be considered separate or non-marital property in the event of a divorce. Things can get very complicated, however, as you make improvements to your business and invest your personal efforts in increasing the company’s value during your marriage. Depending on the specific circumstances, the increase in value and retained earnings generated by your business during your marriage could be considered part of the marital estate and, therefore, subject to division in divorce.
What this means is that, if your business has grown substantially during your marriage, a portion of it could be allocated to your spouse if your marriage comes to an end. For some business owners, such an outcome could result in the closing or selling of the company. If you have plans to one day leave the business to your children, the idea of closing or selling could be tragic.
Sign a Prenup
Fortunately, you can take steps to ensure that the rights of your children regarding your business are fully protected. A prenuptial agreement can specify that the business, its interests, and any increase in value during the marriage are not subject to division. You could even include offsetting assets to be sure that your spouse is not placed at a serious disadvantage by the agreement. By doing so, you will be able to continue to pursue your business goals and to offer the company to your children when the time comes without worrying about your divorce forcing you to sell or close.
Let Us Guide You
As you are developing the terms of your prenuptial agreement, you will need the assistance of an experienced Geneva family law attorney. Call The Law Offices of Douglas B. Warlick & Associates at 630-232-9700 today for a confidential consultation. We will help you protect your rights and those of your children no matter what the future may hold.