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  1. #1
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    Dec 2012
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    Default Should You Enter a Postnuptial Agreement for a Business You Started Before Marriage

    My question involves a marriage in the state of:CA

    Hi everyone,

    My wife and I recently celebrated our 1 yr wedding anniversary. I own a business as an LLC formed prior to us getting married, would it be advisable to also file a post-nuptial as well? Before the LLC I ran the biz independently for 7 years as a sole prop, but formed the LLC with the assistance of a lawyer to protect myself.

    I'm the only member on the LLC (formed in CA) and my wife does help out with admin tasks (eg. paper work, occasional graphic design, etc), but I run the other 98% of my now (almost 10 yr) technical consulting business.
    We have no kids and I (or we) don't own any major assets (no house, etc).

    Lastly, I'm aware that pre/post-nuptial agreements typically require some sort of 'consideration' to be valid. In my case, I will be sponsoring my wife (as US citizen) in the next month and figured this would be the proper grounds on which to base this should this issue arise.

  2. #2
    Join Date
    Mar 2013
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    Default Re: Biz Already in Llc, Do I Need a Post-Nuptial As Well

    My wife and I recently celebrated our 1 yr wedding anniversary. I own a business as an LLC formed prior to us getting married, would it be advisable to also file a post-nuptial as well?
    Your business may be your sole and separate property but from the day your were married your wife accrued a marital interest in any income from the business, any assets acquired by the business after the marriage date, and any increase in value of assets owned prior to the marriage. She wouldn't have to lift a finger to help you in the business and that would still be true.

    So, yes, you need a post-nup if you want to keep any of that stuff out of her hands.

    Lastly, I'm aware that pre/post-nuptial agreements typically require some sort of 'consideration' to be valid. In my case, I will be sponsoring my wife (as US citizen) in the next month and figured this would be the proper grounds on which to base this should this issue arise.
    Oh, you're going to extort a post-nup from her by denying sponsorship if she doesn't agree to it.

    Nice guy.

    I just hope she's smart enough to tear you a new one.

  3. #3
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    Default Re: Biz Already in Llc, Do I Need a Post-Nuptial As Well

    Quote Quoting lespaul75
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    My wife and I recently celebrated our 1 yr wedding anniversary. I own a business as an LLC formed prior to us getting married, would it be advisable to also file a post-nuptial as well? Before the LLC I ran the biz independently for 7 years as a sole prop, but formed the LLC with the assistance of a lawyer to protect myself. .
    Did you form the LLC after your marriage? And what exactly do you think the LLC protects you from? It will not protect you from division of assets in California if you or your spouse file for divorce.

    Quote Quoting lespaul75
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    I'm the only member on the LLC (formed in CA) and my wife does help out with admin tasks (eg. paper work, occasional graphic design, etc), but I run the other 98% of my now (almost 10 yr) technical consulting business.
    We have no kids and I (or we) don't own any major assets (no house, etc). .
    But if you do have children, a postnuptial will not get you out of child support or alimony. If you acquire assets during the marriage, a postnuptial now will not necessarily protect anything.

    A postnuptial is not a prenuptial and the courts do not treat them as being the same. A few things to consider from the developing case law:

    The agreement has to be fair and equitable under CA law. There can be no coercion (agree or I will not sponsor you). There can be no fraudulent inducement (you already have something in mind). There has to be complete financial discloser. Each of you need your own attorney to advocate your position.

    I don't see any point to it at this stage of your marriage.

  4. #4
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    Dec 2012
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    Default Re: Biz Already in Llc, Do I Need a Post-Nuptial As Well

    Thanks @adjusterjack for the input.

    Im not sure I agree that. The whole purpose of establishing an LLC is to provide some level of protection as is quite a common practice as suggested by my lawyer.

    Also, I would not call this 'extorting' my wife - as in any contracts there needs to be some 'consideration' for it to be valid. Getting married is a sufficient 'consideration' for a pre-nup, but since we're already past this, the only real 'consideration' is our forthcoming paperwork. Call it what you like, but Im only following what would constitute a legally binding agreement.

    Thanks for your input.

    ________________________________________

    Hi @budwad thanks for the input. But as I clearly stated, I formed the LLC prior (ie. before) to my marriage.

    Also I fully understand that this will not protect me from child support if/when we have children. I have no problem paying for this or even alimony, my question was specifically pertaining to the business itself, nothing else.

    We have a wonderful working relationship and Im confident that we can work together in the event our marriage does not work out. We will of course each have our own lawyers to make this as fair as possible.

    Thanks for the input as well.

  5. #5
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    Default Re: Biz Already in Llc, Do I Need a Post-Nuptial As Well

    What assets do you think your business will acquire in the future? You said you are a consultant. So you have some office equipment and maybe some contracts.

    A postnuptial agreement is looked at only within the time frame when it was signed. OK, so she gets the copy machine and I get the laptop?

    I still don't see how a postnuptial does anything for you at this time.

  6. #6
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    Default Re: Biz Already in Llc, Do I Need a Post-Nuptial As Well

    Quote Quoting lespaul75
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    Im not sure I agree that. The whole purpose of establishing an LLC is to provide some level of protection as is quite a common practice as suggested by my lawyer.
    The protection thing is also a common myth.

    The LLC form of business, like the corporation, protects the owners of the business from personal liability for the debts of the business. For example, if the LLC enters into a contract with a third party and breaches it, the LLC is liable for that, but the LLC members are not unless they personally guaranteed the contract, which is something that lenders and astute business people often insist upon. The LLC member is always responsible for his own debts and wrongs, including liability for the negligent acts he performs for the business (and for which the LLC might also be liable). There is also the possibility of “piercing the corporate veil” (google it) which is an even bigger risk for single member LLCs.

    Further, the LLC is an asset, a "thing" that you own which is not likely to be successfully shielded from your wife's marital interest.

    Quote Quoting lespaul75
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    Also, I would not call this 'extorting' my wife - as in any contracts there needs to be some 'consideration' for it to be valid. Getting married is a sufficient 'consideration' for a pre-nup, but since we're already past this, the only real 'consideration' is our forthcoming paperwork. Call it what you like, but Im only following what would constitute a legally binding agreement.
    Call it what YOU like, but once her lawyer sees that you are using the threat of withholding sponsorship to induce her agreement, you'll be in for a rude awakening.

  7. #7
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    Dec 2012
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    Default Re: Biz Already in Llc, Do I Need a Post-Nuptial As Well

    Thanks @adjusterjack for the clarification.

    On the sponsorship issue I just figured this would be a perfect time, again, since there needs to be some consideration for these types of contracts. I'll reach out and consult with an attorney. Thanks

  8. #8
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    Default Re: Biz Already in Llc, Do I Need a Post-Nuptial As Well

    Quote Quoting adjusterjack
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    The protection thing is also a common myth.

    The LLC form of business, like the corporation, protects the owners of the business from personal liability for the debts of the business. For example, if the LLC enters into a contract with a third party and breaches it, the LLC is liable for that, but the LLC members are not unless they personally guaranteed the contract, which is something that lenders and astute business people often insist upon. The LLC member is always responsible for his own debts and wrongs, including liability for the negligent acts he performs for the business (and for which the LLC might also be liable). There is also the possibility of “piercing the corporate veil” (google it) which is an even bigger risk for single member LLCs.
    All true but none of it protects him from a divorce settlement.

    Quote Quoting lespaul75
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    On the sponsorship issue I just figured this would be a perfect time, again, since there needs to be some consideration for these types of contracts. I'll reach out and consult with an attorney. Thanks
    You really don't know what you're talking about.

  9. #9
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    Oct 2006
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    15,996

    Default Re: Biz Already in Llc, Do I Need a Post-Nuptial As Well

    Quote Quoting lespaul75
    View Post
    Thanks @adjusterjack for the clarification.

    On the sponsorship issue I just figured this would be a perfect time, again, since there needs to be some consideration for these types of contracts. I'll reach out and consult with an attorney. Thanks
    You are playing games with your wording, and you know it. Any way you word it its a threat to withhold sponsorship unless she gives up some of her marital rights. That is despicable. If someone did that to me I would divorce them in a heartbeat. In fact, that might even be a good enough reason for the government to give her a green card without a sponsor.

  10. #10
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    Dec 2012
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    13

    Default Re: Biz Already in Llc, Do I Need a Post-Nuptial As Well

    Thanks everyone for your input, I honestly did not see it that way but I get everyone's point of view. I don't know what else would be considered 'consideration'. In either case we can always do this after we get through all our paperwork. Again, I really appreciate the honesty on everyone's behalf.

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