Aside from the emotional complications in divorce, financial complexities can and often do arise. Many couples involved in a marital split have to take into consideration the many financial responsibilities they will soon assume. In the case of owning a business, whether premarital, or with your spouse, it is important to understand your rights as a business owner.
Pennsylvania law is clear in that, any marital property, which is property acquired during the marriage, is subject to equitable distribution through the divorce. If the divorcing parties elected to start a business during the marriage, the entire business is subject to equitable distribution. Some business owners enter into a marriage with a business already intact, making the business a premarital asset and not subject to division in the divorce. However, any increase in value of that business during he marriage is subject to equitable distribution.
The most common avenue to protect a business is to enter into a written contract, or prenuptial agreement, voluntarily entered into by the parties with full disclosure of the parties financial positions before entering into a marriage, which will outline how the business will be distributed if the parties divorce. A postnuptial agreement would similarly outline how the business would be valued or distributed upon divorce.
Pre-nups and Post-nups are a useful tool for spouses who want to decide their property rights before and after divorce. If you are contemplating a pre-nuptial or post-nuptial agreement with your spouse, please contact the family law attorneys at Petrelli Previtera.