You’ve now read our last three blogs in this series and had the bejesus
scared out of you, what now?
If you are getting married, there is a fairly simple way to protect yourself
and your assets, including your business – have a Prenuptial Agreement prepared.
A Prenuptial Agreement can spell out that your business is your sole and
separate property and you can insure that your efforts, the profits and
the increase in value in your business during the marriage stays yours.
Arizona not only allows parties to enter such Prenuptial Agreements, but
if done correctly, such agreements can be quite “ironclad”
and almost impossible to invalidate.
If you are already married, you may want to explore entering into a post-nuptial
or marital settlement agreement. These agreements differ from prenuptial
agreements, not only because they occur after the marriage, but these
agreements are subject to closer scrutiny by the courts and the burden
is on the person trying to enforce it to show that the agreement meets
all of the elements of a normal contract with proof of consideration (i.e.,
something of value given by you for the non-owning spouse relinquishing
his/her community property rights in relation to the business), but also
that the agreement is inherently fair and equitable to BOTH parties free
from any fraud, coercion or undue influence by clear and convincing evidence
(a high standard). The Court, in examining post-nuptial or marital agreements,
can independently assess whether it is fair and equitable and is not limited
as with a prenuptial agreement. To ensure that a marital agreement is
enforceable can be much more complex, but it is not impossible and can
be a useful tool in protecting yourself and your business.
Finally, in combination with a post-nuptial agreement, you can also structure
the terms of the operating agreement of your business to set forth mechanisms
for valuing the ownership interest or shares of the business and “buyback”
provisions for any other owners in the event of a divorce, bankruptcy
or death of an owner. Having your spouse and all other non-owning spouses
of owners sign off acknowledging these type of terms and the limitations
on their interests can aid as proof and in the enforcement of marital
agreements concerning your business.
Whether you are looking at preparation of a prenuptial agreement, a marital
or post-nuptial agreement, or preparing or revising your business’
operating agreement, the assistance of an experienced attorney is essential.
If you would like to consult with one of our experienced attorneys in
regards to the protection of your business in the event of a divorce,
OWENS & PERKINS at
480.994.8824 to schedule a free 30 minute consultation.