HOW DO I PROTECT MYSELF AND MY BUSINESS?
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, please call OWENS & PERKINS at 480.994.8824 to schedule a free 30 minute consultation.