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Property division in divorce and business ownership

On Behalf of | Feb 27, 2019 | Divorce |

A prenuptial agreement is one method that a Connecticut entrepreneur can use to protect a business in case of a divorce. One way of approaching a prenup is to think of it as making arrangements to divide properly fairly outside of the stressful atmosphere of a divorce. A prenup is not an effort to deny a spouse a fair share of assets but an opportunity for a couple to reach an agreement in a calm environment.

Establishing the business as sole property in the prenup may be the easiest solution since it means the process of valuation can be avoided, but some couples may feel this is not fair. A prenup can propose a range of solutions for ensuring that the spouse gets a share of the company’s value. It can also address the issue of what happens if both spouses own the business. The options include keeping the business or one person selling it to the other. Married couples can cover these issues in a post-nuptial agreement.

Another option is using the organizing documents to establish who owns the business and what happens if there is a divorce. For the business to be considered separate property, no marital assets should be used to fund it, and any work a spouse does for it should be compensated at market rates.

Even if couples do not have an agreement in place, they might be able to negotiate their divorce settlement. Going to litigation can be stressful and expensive, and it can also result in an outcome for property division that neither person is happy with. With negotiation, both people have more control over the outcome. Each party should have separate legal counsel during these negotiations.