If you are a small business owner getting married in Illinois, you may be so excited and overwhelmed at the prospect of the upcoming wedding and your new life with your partner that you may be neglecting to remember another major part of your life: Your business ownership.

While it may be difficult to imagine your relationship ever going sour, the statistics on divorce speak for themselves. Many business owners have lost all or part of their business in a divorce, effectively flushing years of hard work and personal investment down the drain. While your relationship may always be happy and successful, a prenuptial agreement that protects your business from marital property division is always a good idea. In the best-case scenario, it will sit at the back of a drawer and never be seen again. In the worst-case scenario, it can make the difference between allowing your business to continue thriving and losing everything you have. Here are three ways a prenuptial agreement can help you protect your small business.

Prenuptial Agreements and Small Businesses

While prenuptial agreements cannot regulate interpersonal matters like intimacy or child custody schedules, they are excellent instruments for managing financial matters. A great prenup can help you protect your business in the event of a divorce in many ways, including:

When it comes to prenuptial agreements, the general opinion often seems to stem from the negative stigma that anyone who pursues such an agreement must not have much faith or trust in their future spouse. Although this may actually be the case for some individuals, in most cases, this stereotype could not be farther from the truth. In fact, prenuptial agreements can help lay the groundwork for long-lasting and fulfilling marital relationships.

Prenuptial Agreements in Today’s World

Prenuptial agreements are extremely popular nowadays, for multiple reasons. Their popularity is not merely a reflection of the state of marriages in today’s society; they also offer practical advantages that benefit both partners equally. Broaching the topic with your future spouse can feel uncomfortable at first, but if you share a mutual interest in pursuing a prenuptial agreement, it can prove to be a valuable, effective tool as you enter your marriage.

Here are some factors to discuss if you are on the fence about signing a prenup:

Most people have heard of prenuptial agreements, but many consider them something that happens in Hollywood or with other wealthy couples. However, there are quite a few ways in which an “ordinary” couple could benefit from drafting and signing a prenuptial agreement. While you may think that you will never split up, the reality is that a substantial number of all marriages—up to 40 percent or more, according to some estimates—end in divorce.

What is the Purpose of a Prenuptial Agreement?

A prenuptial agreement is primarily a formal way for a couple to decide how their property and assets should be split up in the case of a divorce. As such, it is somewhat like a property settlement that is agreed to before anyone is even thinking about filing for a divorce. It is important to keep in mind that a prenuptial agreement can also address concerns, such as investments and life insurance, that may be applicable during the marriage as well.  

Individuals with property, a business, or a potential inheritance often want to make sure these assets do not become marital property. A prenuptial agreement is one way for both spouses to keep the property they bring into the marriage separate. In a prenup, you can also choose to designate certain assets as marital property, even if they would otherwise be considered non-marital.

While it has become more common to have them, the truth is that not every couple needs a prenuptial agreement—also referred to as a prenup—at least not in Illinois. Some couples or individual partners insist, but in many cases, there is not enough between the two people to warrant a careful, item-by-item disposition, which is often what a prenuptial agreement turns out to be. However, a prenup can be beneficial under some circumstances, and it is a good idea to consider whether it might be right for your marriage. 

Do You Have Extensive Assets?

As one might imagine, couples with significant assets individually or between them will benefit from a prenuptial agreement in multiple ways. Perhaps the most common is in dealing with property division issues during divorce proceedings. Illinois adheres to the theory of equitable distribution, meaning that all marital property is divided in the most equitable or fair way possible, rather than giving each spouse half, as might happen in a community property state. A prenuptial agreement is one of the easiest and most common ways to clarify whose assets are whose before the marriage, meaning that all the specified assets can be classed as non-marital property, and thus likely not subject to division.

Another way prenups can help those with extensive holdings is to provide a way to track assets that become commingled with marital property. If you had a certain sum of money before the marriage, listing it in a prenup may help you retain it in divorce, even if it would normally be considered marital property as a result of commingling or use to benefit the marriage. Some couples are agreeable to such assets becoming marital property, but if you would rather retain them, mentioning them in a prenup may be enough to accomplish that goal. The divorce court does have the discretion to deny that provision if it puts your partner at an undue disadvantage, however.

Prenuptial agreements, also called premarital agreements or “prenups,” are beneficial legal tools couples can use to manage and protect assets. Although they are often associated with celebrity marriages, prenups are not only for the rich and famous. Anyone can benefit from the protections offered through this valuable legal tool, but those who choose to create a prenup must be sure to do it correctly. It is not uncommon for a couple to think that they have a legally-binding prenuptial agreement only to discover it is unenforceable during a divorce. There are several circumstances which can invalidate a prenuptial agreement.

Prenups Must Meet Certain Criteria to Be Legally-Binding

You may remember the outrageous comedy movie Liar Liar. In the film, Jim Carrey’s character is a divorce attorney helping a less-than-ethical client divorce her husband. Although the movie is filled with exaggerations and inaccuracies, the clip in which the client’s prenuptial agreement is found to be invalid in court is fairly realistic. The client had entered into a prenuptial agreement with her husband upon getting married, but it was discovered that she was only seventeen-years-old when she signed it. Minors cannot enter into legally-enforceable contracts such as a prenuptial agreement. So, if one or both of the individuals were under age 18 upon signing the prenuptial agreement, it will not be valid.