Any small business owner who is planning on getting married can benefit from the protections offered by a prenuptial agreement. In the event of a divorce, a small business can become financially unstable, if not damaged to the point of closure. We can safely assume that no one gets married with a plan to get divorced in a few years. Therefore, it is not uncommon for asset protection to be overlooked in the throes of the wedding day countdown.
North Dakota is not a community property state. This means that pre-marital assets will not be equitably divided between the parties Instead, each party will remain in possession of what was owned prior to the marriage. However, there are other factors such as economic misconduct that could come into play. If the spouse who owned the business acted in a financially irresponsible manner that caused the marital assets to be depleted or significantly reduced, then a judge could award compensation to the other spouse. This, in turn, could significantly hurt the business. Also, if the non-owner spouse can show that he or she significantly contributed to the business, then a judge may find that he or she is due part of the asset.
Prenuptial agreements have been stigmatized in our culture with the belief that if one is requested, then there is something to hide. This could not be further from the truth. Simply put, they are a smart business decision agreed upon by two smart adults. A prenuptial agreement is a binding contract that determines what property is to be considered marital, what assets belong to each individual, and how marital assets will be divided in the event of divorce.
It is far less complicated for parties to discuss these topics pre-marriage than to be forced to address them before a judge during divorce when emotions are running high. Talk to a family law attorney together prior to your wedding day. He or she can offer great advice on how to protect assets and why it is important to do so.
