Asset protection: Pre-marital planning for business owners
Prenuptial agreements, often called prenups, are legal documents that couples sign before getting married. These agreements frequently outline how couples divide assets and debts if the marriage ends in divorce. Other options that protect assets are post-nuptial agreements, trusts and buy-sell agreements. Trusts can hold business assets separately from personal assets, while buy-sell agreements can outline what happens to a business if one partner gets divorced. Prenuptial agreements and other asset protection tools provide business owners economic stability and peace of mind.
Community property is the concern
California is a community property state. This means that many of the assets a couple accrues during the marriage are subsequently split equally (not just “fairly” or “equitably”) if they divorce. Moreover, assets that significantly increase in value during a marriage can become marital property, even if the spouse started the business before the marriage. This is especially true if the increase in value is due to the efforts of either spouse during the marriage. For example, if one spouse actively works in the business and contributes to its growth, the increased value could be seen as a marital asset.
Additionally, other factors, such as commingling funds or using marital assets to support the business, can also lead to the business being partially considered community property. Business owners need to be aware of these potential issues and consider prenuptial agreements or other legal tools to protect their interests.
Finally, other business partners might insist on a prenup, postnup, buy-sell or other arrangement to protect their interests. They want to ensure that the business remains stable and profitable, and that ownership does not change unexpectedly due to a business partner’s divorce.
Key details to include in the agreement
When creating a prenuptial agreement or using other asset protection tools, it is essential to consider several key details:
- Clearly outline which assets are considered separate property and which are marital property. This can help prevent disputes later on.
- Specify how business assets will be handled in the event of a divorce. This might include details about ownership, management and valuation of the business.
- Include provisions for spousal support or alimony, if applicable.
- Make sure the agreement is fair and reasonable for both parties, as courts may not enforce a one-sided agreement.
- This protection should
also apply to spouses who inherit a family business. While inheritance typically goes to an individual, the nature of a business can change over time due to commingling or transmutation, making it community property.
The role of a certified attorney
Working with a certified attorney can help ensure that your prenuptial agreement and other financial planning tools are legally sound and protect your business. An attorney can provide valuable advice on what to include in the agreement and help you understand your legal rights. They can also assist in drafting the contract to ensure it meets all legal requirements and is enforceable in court. Having an attorney by your side can give you peace of mind and confidence that your business and personal assets are protected.
Our Testimonials
Serving clients in Encinitas, Rancho Santa Fe, Oceanside and Vista and throughout North County San Diego.
-
"Pierre is, without a doubt, the only attorney in Southern California I trust with any family law matter."Pierre and his staff, are without a doubt, the most effective and experienced law firm around. Pierre is known for attaining the clients desired results, and then some.- Ryan H.
-
"Pierre Domercq is an outstanding communicator."I mostly just wanted an outside 3rd party like Pierre to assure me that I was on the right track and he gave me that assurance. Thank you Pierre.- Paul H.
-
"They handled my case with a high degree of honest professionalism and attention to detail with as good of a result as could be expected in my case."Pierre has thorough knowledge of the law and he championed my case with determination and wisdom. He and his team treated me with kindness and saw me through one of the most difficult times in my life.- Lisa G.
-
"I highly recommend Pierre Domercq. He has helped me twice with legal guidance. He is extremely personable, intelligent and dedicated to his clients."He has twice been able to steer me in a direction to avoid litigation. Not often you find and attorney with such ethics. Hopefully we never need his assistance again but if ever do, I know exactly where I would go.- Juan V.
-
"I have been a client for 5 years and have full trust in the advice that Pierre provides me and he has never steered me wrong."Pierre is intelligent, quick, and always one step ahead! His staff are dedicated to the cases they are working on and always make me feel like I am a priority.- Melissa
-
"Pierre and his team are impeccably professional. He helped increase the time with my kids and am forever grateful."His guidance is sound on all levels and although at times I did not like to hear the message, he was correct and based in logic and reality in difficult situations. He had phenomenal rapport with the family court system judges.- Jeremy R.
-
"(Rebecca) was there to answer and assured me of the process."Pierre is a wonderful attorney and has an amazing staff that supports him! He helped me in my divorce and got me more than I could have asked for. He made sure I wasn’t taken advantage of and made me feel so comfortable through out the process.- J. B.
-
"His skill as an attorney was impressive. Highly recommend."Pierre Domercq is an exceptional and skilled attorney. He provided sound counsel in my matter, and helped me to achieve my goals and a positive outcome.- Anjai P.
Meet Our Attorneys
Work With One Of The Most Skilled Family Law Firms In California
.2503061027534.png "ACFLS Member 2020")
.2503061025535.png "Super Lawyers Daniel")
