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Q:Two years ago, I took over a small business started by my
parents. Now I am engaged to be married. Do I need a
prenuptial agreement?
A:Prenuptial agreements are not just for celebrities.
While asking your sweetie to sign a prenuptial agreement prior to
the wedding is not very romantic, such an agreement is a critical
tool in asset protection, one that every business owner should
consider.
Stock in a family business owned by one spouse is classified by
the courts as marital property, and absent a valid prenuptial
agreement would technically be subject to division pursuant to New
Hampshire's statutes, in the event of a divorce.
State law dictates that property will be divided equitably by
the court. "Equitable" means that the property is fairly
divided. All property, no matter whose name it is titled in, is
thrown into one "pot" at the time of divorce and then
divided equitably by the court unless there is a valid prenuptial
agreement dictating otherwise.
A prenuptial agreement can not only protect an ownership
interest in a closely held business, it can also provide a formula
which the parties agree to use to value such stock in the event of
divorce, whether by reference to a shareholder agreement or by
including some formula within the body of the prenuptial
document.
Once the decision has been made to enter into a prenuptial
agreement, the parties must exchange complete lists of all assets.
In New Hampshire, a legally enforceable prenuptial agreement must
be in writing and must be voluntarily entered into after a full and
complete disclosure of all relevant facts. In the event of a
challenge to the validity of a prenuptial agreement, the court will
closely scrutinize whether each party fully understood the
agreement and whether there was full financial disclosure. New
Hampshire courts considering disputes about the validity of
prenuptial agreements have emphasized that each party should obtain
legal advice in the drafting and execution of a prenuptial
agreement. In addition, timing is important. An agreement
entered into less than one month before the wedding may be
difficult to enforce.
Hiring a lawyer to draft a prenuptial agreement costs money, of
course, but if you are considering marriage, and have assets you
wish to protect, a prenuptial agreement is a wise investment. In
the case where a family business involved, it should be pursued
without question.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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