Interest in pre-nuptial agreements has steadily risen as individuals seek to protect family wealth, especially where is a family business which has been built up over more than one generation. On the face of it, this seems to be a wise precaution. The assets in a family business are often not considered to be truly owned by the generation that is currently running the company but that they are merely held in their custody to be expanded and passed on as the previous generations have done. Unfortunately when divorce looms, in some cases, this thinking totally changes. If the business has been properly advised the business assets will be adequately protected but this is not always the case.
The assets of a marriage are divided from a starting point of 50/50 and in case of businesses created prior to the marriage have to be judged as either marital assets or non-marital assets. All this is compounded by the difficulty in valuing a business and the liquidity of (lack of) its shares etc. Valuations involving private companies can be quite variable and the courts will approach with caution. If the business is judged to be a non-marital asset this can lead to a challenge from the divorcing spouse.
A pre-nuptial agreement adds another layer of security for the business assets. Frequently but by no means always, the person marrying into the family business has less wealth and assets compared to their husband or wife working within the business. It may be that the new husband or wife will join the family business, which puts an entirely different slant on whether they are entitled to a slice of the business. A prenuptial agreement allows the court to understand what the couple thought about the ownership of their assets and how they should be divided in the event of a divorce. Post-nuptial agreements can be drafted throughout the marriage, particularly if other assets are acquired.
The lawyers at Giambrone try to focus on fair and equitable arrangements in a pre-nuptial or post-nuptial agreement, which aim to protect a variety of factors. If there are children involved their interests are paramount; the acquired assets built up by a family business or where the wealth is expected to cascade through the generations presents an altogether different aspect to be unravelled. The expectation is that the children of the marriage may choose to join the family business and carry on developing the wealth and assets. In the event of divorce, their interests are often bound up with those of the custodial parent.
Our lawyers will take different approaches depending on the couple, in some instances, one couple will want to sit around the table and thrash out an agreement; in other cases, they prefer the lawyers to undertake the lead in negotiations, or elect to revert to the courts.
Pre-nuptial agreements are commonplace in some countries and are often regarded as an essential requirement for individuals involved in a family business.
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