When you got married, your business wasn't worth much. It was just getting off the ground. In the 10 years since, it's grown dramatically.
You're not planning to get divorced, but your success has helped you realize what a threat it could be. What if your spouse gets a percentage of the company? That could break you financially if you have to buy him or her out, or you'll be stuck as business partners.
Neither option is ideal, so now you're considering a postnuptial agreement. Below are five rules to follow:
- Do not use an oral agreement. Get it in writing.
- Do not hide any assets. Don't exaggerate or underestimate intentionally. Full disclosure is necessary or it may not hold up in court. For instance, if you tell your spouse the company is only worth $200,000 when it's worth $2 million, your spouse could claim he or she never would have signed knowing the real value.
- Coercion cannot be used in any form. Both of you must sign voluntarily.
- Do not write out a postnuptial agreement that is unconscionable or too heavily weighted in your own favor. It can look like you were trying to rob a spouse who was in love with you, exploiting that romantic relationship.
- Both of you must sign it. In a best-case scenario, you'll do that with witnesses and perhaps a notary. If your spouse later claims the document is fake, you want someone who can back up your side of the story.
You can legally protect your business, even if it's too late to use a prenup because you're already married. Be sure you know all of your options and what steps to take.
Source: INC, "How to Protect Your Business in a Divorce," Jeff Landers, accessed Feb. 28, 2018