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Why many entrepreneurs sign prenuptial agreements

On Behalf of | Mar 22, 2024 | Prenuptial And Cohabitation Agreements |

Florida law requires marital estates to be divided equitably by a divorce judge, but couples who would rather decide for themselves how their assets should be divided can enter into prenuptial or postnuptial agreements. These agreements protect assets, avoid disputes and provide peace of mind by letting spouses know where they stand, and they are signed by people from all walks of life. Entrepreneurs often enter into prenuptial agreements to protect their companies, and they sometimes sign the documents because lenders or investors ask them to.

Protecting business assets

Entrepreneurs could find obtaining credit or attracting collaborators difficult if their businesses could be divided in a divorce. About 50% of marriages end in divorce, so this is a legitimate concern. Having a prenuptial agreement in place assures creditors and potential investors that a business will continue to operate and its assets will be protected if the founder decides to divorce. A prenuptial or postnuptial agreement could also ensure that valuable intellectual property like formulas, trade secrets and branding elements will remain the property of the business.

Enforcing prenuptial agreements

Prenuptial agreements are legally enforceable contracts in Florida as long as they are memorialized in writing and signed by both parties. However, a court could refuse to enforce a prenuptial agreement if:

• The terms are grossly unfair.

• The agreement was entered into under duress.

• One or both of the parties concealed assets.

• The value of the marital estate has increased or decreased significantly.

Negotiating in good faith

Many entrepreneurs enter into prenuptial or postnuptial agreements to protect their business assets should they decide to divorce. Having a prenuptial or postnuptial agreement in place could make an entrepreneur’s business more attractive to lenders and investors, but the terms should be negotiated in good faith.