Sunday, January 16, 2022
Family business owners and their children who might own or participate in the business are frequently advised to prepare a prenuptial agreement as part of the marital process.
The reason is that the appreciation in value of a business can be deemed a marital asset if the appreciation takes place during the marriage. There are precedent cases addressing the complicated issue of dividing appreciation in value incurred during the marriage at divorce proceedings. While most couples acknowledge the importance of preparing prenuptial agreement structuring a plan to preserve real or personal properties, fewer notice the potential issue on business appreciation.
While preparing prenuptial agreement, it is important to consider the jurisdiction of the parties and the marital property regime since some states are community property states while others are separate property states. The property division in divorce under those two models are based on different calculations and considered on different factors.
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