The news over the last few weeks has been buzzing about the announced divorce of billionaire Rupert Murdoch from his wife. The majority of speculation swirls around how much of the business might be at stake, how much money he stands to lose and how his business partners might be affected. While Louisiana couples might assume that prenuptial agreements are only for wealthy billionaires such as Murdoch, financial planners insist on the importance of having such legal documents in place in order to protect business assets such as a small business.
A prenuptial agreement is especially important to people living in Louisiana. Because the state has community property laws, all assets are divided evenly in the event of a divorce unless there is an agreement is in place. It is especially important for couples to discuss their assets and how they will be divided in the event of a divorce prior to the wedding. A prenuptial agreement in a community property state, in a sense, trumps state law in that it allows couples to predetermine asset division. Such an agreement can protect a business that is already in existence at the time of the marriage.
However, some people begin a business after vows have already been taken. Business owners can still take action to safeguard the business in the event of a divorce. In this case, a post-nuptial agreement may be appropriate. For example, one woman began a successful business after her marriage. Upon her divorce, the business was considered a marital asset, and she had to essentially purchase her husband’s share for a large sum of money to regain sole ownership.
It is hard to predict the future and the potential success of a business making it important for business owners to take measures to protect their assets. While some people in Louisiana may think prenuptial agreements assume that a marriage will end, they are simply a good method of financial planning. They can bring full financial disclosure to a relationship before a marriage and help a couple plan and steer their future.
Source: entrepreneur.com, “Why Rupert Murdoch’s Divorce Is a Wakeup Call for Business Owners,” Leah Ingram, June 17, 2013