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Love is all around, but business is business.
Before you hit the road — well before — a business owner might consider asking their loved ones to sign a prenuptial agreement.
“Business owners, especially family business owners, are excellent candidates for pretrial motions,” says attorney Lisa Spencer, past president of the Minnesota chapter of the American Academy of Matrimonial Lawyers (AAML).
In addition to business owners, people in their 40s and 50s and those who are divorced and considering a second marriage are among those who enter into prenuptial agreements, said M. Sue Wilson, attorney, past president of the Minnesota AAML. Those with large estates or inheritances to protect may also consider prenuptial agreements.
A prenuptial agreement is another type of contract—called a prenuptial agreement under state law—that an engaged couple signs before marriage.
Spencer suggested that he explain the subject of pre-investment as soon as possible.
“At the time of death, you can have a family business and suddenly you don’t want an unwanted owner,” she said.
Time is also important for the courts. In the year In 2018, the Minnesota Supreme Court upheld a lower court’s finding that a prenuptial agreement was invalid because it was “coerced.”
In that case, a man offers his spouse a contract three days before they leave for a destination wedding. He threatened to stop the ceremony unless she signed.
“It’s a tough thing to talk about, but it’s better now than down the road,” Spencer said. “Don’t even wait a few months before the wedding. You don’t want it to interfere with the wedding plans. That’s the worst thing, working on those things and working on the preparations.”
A prenuptial agreement defines what non-marital property is, generally property that one spouse or the other owned before the marriage, including a business or share of the other.
According to the Minnesota Judicial Branch list, marital property includes anything that each spouse acquired during the marriage, including money, real estate, cabinets, furniture, furnishings, and jewelry.
“The basic premise of preemption is to improve the law,” Spencer said. “The minute people get married, they have certain rights under the law, and they can change those rights by contract. But they have to do it with their eyes open and fully disclosed. They have to know what they’re getting into and what their intentions are. It’s about being fair to each other.”
When a couple divorces without prenup, Minnesota law requires courts to make a “fair and equitable division of marital property.” An “I get everything” arrangement won’t stand up in court.
“We’re an equitable distribution state, which means fair, but most of the time, either spouse is paid equally,” said attorney James Vedder, president of the Minnesota AAML. “A prenuptial agreement will at least help you ensure that this business is worth what the parties agreed to at the time, as you had it before the marriage.”
The prenuptial agreement can address the increase in value of the business over time. In the event of a divorce, Vedder likes to let the non-owning spouse get a 10 percent increase if they’ve been married for one to five years, or 20 percent if they’ve been married for five to 10 years.
This approach helps protect both parties. The owner gets a return on investment without someone taking partial ownership or awarding him a large sum of money that would hurt the business, says Vedder. At the same time, if the business does well during the marriage, the non-owner spouse will receive a certain share of the increase.
Neither party needs an attorney to enter into a prenuptial agreement, and one attorney can represent both parties, Vedder said. But he strongly encourages each side to have a lawyer to increase the enforceability of the agreement. A law firm or law office may also keep a digital copy of the original agreement.
Each party entering into a prenuptial agreement must participate in a full financial disclosure, Vedder said. This means exchanging financial statements with assets, liabilities and income, so each party understands what they may receive or give up in a divorce.
Attorney Tiffany Wolter, a member and past chair of the Minnesota State Bar Association’s Family Law Section, said she ties bank and retirement account statements to prenuptial agreements. Without those statements, couples who were married 10 years ago and now divorced more than six or seven years later may have trouble finding statements from online accounts.
“Marital property is anything acquired during the marriage,” Walter said. If the documents aren’t there and you can’t verify them, they’re probably out of business. It’s becoming more and more difficult to go back and try to figure out what your interest in those accounts was.
Minnesota AAML Legislative Chair Michael Dittburner said the chapter is proposing legislation to clarify the prenuptial law because of confusion over a 2018 Supreme Court ruling on enforced prenuptial agreements.
Many divorce cases are being settled instead of going to court because of the uncertainty created by this ruling, Wilson said. “It has changed the world in terms of enforcement,” Wilson said.
According to the decision, the Supreme Court rejected the “unilateral” agreement that requires the husband who owns high-value assets during the marriage to keep the assets by saying that the wife “leaves the marriage”. little bit.”
“You can’t be sure that the price increase won’t be included,” Wilson said of the decision. You can try, but most of us are telling our clients that you never know what will happen. … No one wants this kind of cruelty.”
Todd Nelson is a freelance writer in Lake Elmo. His email is todd_nelson@mac.com.
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