Should you sign a postnup if you start a business?

On Behalf of | Feb 5, 2021 | Family Law

Postnuptial agreements may not be as common as prenuptial agreements, but they serve much of the same function. They allow couples to agree on things, such as how they’ll split up their assets, even before they get a divorce. They may never end the marriage at all, but the postnup simply shows them how things will go if they do.

When you got married, you were both fresh out of college and you felt there was no need for a prenup. Now you’re starting your own company. You still love your spouse and want to stay married, but is this a good time to sign a postnup just in case?

Protecting your business earnings

It can be wise. The issue is that some or all of your business earnings may qualify as marital property since you earned that money while you were together. If there isn’t a postnup saying that the money stays with you, a divorce could send enough money to your spouse that it holds your business back.

Say that your business started with just $100,000 and it is now worth $2.1 million. You’ve made that $2 million, and you want to use it to expand your company. Then your spouse files for divorce and is awarded half of the earnings. Not only do you feel that you lost $1 million that you earned, but now you don’t have the funds to expand your business the way you wanted — costing you even more in the future.

If you have questions about the process of drafting a postnup, an experienced family law attorney can answer them and help you explore your options.