When it comes to family businesses, the lines between personal and professional can easily blur and with so much invested emotionally and financially, it’s crucial to put the right safeguards in place. One of the most overlooked, yet powerful tools for doing this is a prenuptial agreement.
In the event of a marital breakdown, there can be clarity as to how the assets will be divided. This is of importance where there is pre-existing wealth, assets, or savings, and is of particular importance where there is a family business.
When a court is considering the assets of parties on divorce, a family business will be included in the list of assets. The courts have a wide discretion when it comes to distributing assets, and the needs of any children of the marriage and the other spouse are of high importance. The starting point is equality, and this may affect the business and the level of income being generated by it.
A Pre-Nuptial Agreement cannot simply ring fence all assets to the detriment of the other party, particularly if their needs would not be met with this arrangement. However, providing the agreement has been prepared correctly, at least 28 days prior to the marriage, the parties have entered into the agreement voluntarily, there has been an element of financial disclosure, and both parties have received legal advice, it should be expected by the parties that the terms of the agreement will be binding.
Therefore, this agreement is a very sensible consideration, to avoid potential difficulties upon divorce later. Whilst it may seem unromantic, it should not be approached as a signal of mistrust, but as a sign of responsibility. Just like having insurance or a succession plan, a prenup is simply a way to protect the people and businesses we care most about.
It is also worth noting that even if the parties are already married, a Post-Nuptial Agreement can be put in place providing this is entered into voluntarily and is considered fair in the circumstances.
In summary, a Nuptial Agreement, whether before or after marriage, can be a very important tool in protecting a family business and allowing families to focus on growth and legacy, rather than risk.
For anyone involved in a business and considering marriage, or indeed already married, this should always be something that further advice is obtained.
Our specialist family lawyers can review your specific circumstances, and we recommend obtaining advice at the earliest opportunity. We offer a free exploratory call so that we can match your specific needs with the right person in our family team. For more information or to arrange an appointment with a member of our Family Team, please contact us on 01206 764477. The team can offer advice at one of our offices in Colchester, Chelmsford, Frinton-on-Sea, Ipswich or Bury St Edmunds, or by telephone or video appointment. We are also pleased to be able to support Blue Light members and offer a discount on our initial fixed fee meeting.
