Should I Use a Prenup or Postnup to Protect My Business Assets?

 Posted on July 29, 2021 in Family Law

As a business owner, you may assume that your business assets are completely separate from your marital property, but this is often not the case. According to Illinois law, business assets acquired by a spouse during their marriage are typically considered to belong to the marital estate. Even business assets owned before a marriage can be at risk of becoming commingled with marital assets and losing their separate identity. One way to ensure that your business assets remain your own is to address them specifically in a prenuptial or postnuptial agreement with your spouse.

Prenuptial Agreements for Business Owners

If you are planning to get married and you already own a business or professional practice, that business will still be considered your non-marital property once you get married. However, a prenuptial agreement can provide an additional safeguard to ensure that it stays that way throughout your marriage. Beyond designating your ownership rights to the property, your prenuptial agreement can also include other provisions that may be beneficial to you and your partner.

For example, you may want to include provisions protecting your partner and the marital estate from any debt or liability that your business incurs. You may also want to include provisions outlining your partner’s rights, if any, to use or make decisions regarding your business assets, as well as how you will compensate any contributions your partner makes to the business. You can also include an agreement regarding the division of assets and spousal support in the event of a divorce, stipulating that you will retain your business while leaving your spouse enough assets to remain financially secure.

Postnuptial Agreements for Business Owners

Ownership rights for businesses acquired or started during a marriage can be more complicated. If, during your marriage, you fund a business entirely with non-marital assets or acquire it as a gift or inheritance, it may technically qualify as non-marital property. However, if you contribute any marital assets to the business, or if your spouse is involved in founding or acquiring the business with you, the business itself is likely a marital asset. In either case, a postnuptial agreement can provide written documentation of how the business should be treated.

Like a prenup, a postnup can help you ensure that what starts as a non-marital business stays that way. If a business starts as a marital asset, a postnup can specify each spouse’s ownership and decision-making rights, and address how the business should be divided or otherwise treated if you and your spouse divorce.

Contact a Chicago, IL Prenuptial Agreement Lawyer

At the Law Office of George J. Skuros, we advise and represent business owners in the creation of prenuptial and postnuptial agreements, and we can also help you protect your business throughout the divorce process. We can help you understand the best course of action whether you are happily married or preparing for divorce. For a free consultation, contact our Cook County family law attorney today at 312-844-1222.

Source:

https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2087&ChapterID=59