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Prenuptial or postnuptial agreements may ease business worries

On Behalf of | Dec 21, 2019 | Divorce

When a Tennessee resident owns and operates a separate business before a marriage, he or she may wish to consider asking for a signed prenuptial agreement. In some cases, a soon-to-be marriage partner may view this request as offensive or an indication that a potential spouse lacks confidence in the relationship’s success. Having a prenup, however, may provide comfort and assurance that an individual’s own separate property will remain in his or her possession should a divorce occur.

As noted by CEOWORLD magazine, a premarital agreement clearly lists any preexisting assets, and a spouse’s signature may act as a waiver from a future claim. While a signed waiver may result in additional ownership protection, couples who do not have a prenup may always create a postnuptial agreement after they get married.

Postnuptial agreements may determine property division

After a marriage takes place, spouses have the legal right to draft an agreement to determine in advance how to divide an asset in the event of a divorce. During a divorce in Tennessee, a family court judge may otherwise divide an asset or property by its fairness to each spouse. Both spouses must agree to a postnup’s terms and sign it for a court to enforce its provisions. Agreements signed under duress or with incomplete information may not hold up in a courtroom.

A spouse may not have a right to claim separate property

Under the Volunteer State’s equitable distribution laws, a separate business started before a marriage generally remains part of an individual’s own property and is not subject to division. A soon-to-be-ex-spouse, however, may have a legal right to some of the income from the business earned during a marriage. If a spouse participated in the business’s management or worked as an employee during the marriage, he or she may file a claim for a fair payout during a divorce.

Dividing assets such as a business during a divorce is oftentimes complex. Determining how much a company is worth ahead of time may help in negotiating a fair settlement.