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  1. #1
    Join Date
    Dec 2012
    Posts
    13

    Default Should You Enter a Postnuptial Agreement or Give Your Spouse Shares of Your Company

    My question involves a marriage in the state of: CA

    I got married two years ago, and although I was well aware of a pre-nup, at the time I married my business was struggling and was going to dissolve it to an employee. Unfortunately the job offers did not pan out and I had no choice but to continue with my business. Now two years later, my business is now steady and projected to grow and I don't plan on looking back. However over these two years my wife has helped me with various minor administrative tasks (ie. marketing, accounting, admin, etc) since she could not work legally (no work permit at the time).

    My question is: would it be best to do a post-nup or assign her a ownership interest in my LLC?

    Couple facts before advising. BEFORE I married my wife I had already owned my business for 12 years on my own. Over those years I established an extensive network of contacts/clients which have served as my primary source of income to this day.

    The reason I did not do a prenup before we got married was because I was convinced I was going to sell the business. As such, I did not see a point in hiring lawyers to draft a pre-nup if there were no assets to protect, in this case, my business (services/consulting). I have no problem granting her a small non-controlling interest in the business, but I want to protect my business as best I can since I started that well before we married.

    Any feedback would greatly be appreciated. Thank you.

  2. #2
    Join Date
    Mar 2013
    Posts
    16,789

    Default Re: Postnuptial or % in Company

    Your business is community property. She already has a 50% marital interest in it even if nothing is on paper. That you owned the business for 12 years before marriage is likely to be irrelevant because your failing business two years ago was worth nothing (or a pittance) and, with your wife's assistance your business went from nothing to something in two years.

    If, by "small non-controlling interest" you intend to reduce the 50% marital interest she already has, she'd have to be incredibly stupid to agree to that.

    Nope, I think you are stuck with the status quo.

    I hope your business prospers. Keep your wife happy so she doesn't decide to divorce you and take you to the cleaners.

  3. #3
    Join Date
    Jul 2018
    Posts
    1,200

    Default Re: Postnuptial or % in Company

    Quote Quoting lespaul75
    View Post
    My question is: would it be best to do a post-nup or assign her a ownership interest in my LLC?
    A "post-nup" is nothing more than an agreement made between spouses after marriage. What exactly would be the purpose of making a post-nup? As far as assigning your wife an ownership interest, you're certainly free to do that, but no one here will have the slightest idea whether it's a good idea (for you or her or both of you), much less the "best" idea.

    Quote Quoting lespaul75
    View Post
    I want to protect my business as best I can since I started that well before we married.
    You need to consult with a local attorney to discuss your options.

    Quote Quoting adjusterjack
    View Post
    Your business is community property. She already has a 50% marital interest in it even if nothing is on paper.
    Nothing in the original post supports this conclusion. The OP told us that the "business" is an LLC. If we assume that the OP is the sole member of the LLC, then that asset is separate property because it was owned before the marriage.

    Quote Quoting adjusterjack
    View Post
    That you owned the business for 12 years before marriage is likely to be irrelevant because your failing business two years ago was worth nothing (or a pittance) and, with your wife's assistance your business went from nothing to something in two years.
    It's quite relevant that it was owned before the marriage because that's what determines whether it's separate or community property. That the LLC's financial condition happened to improve after the marriage doesn't change that.

  4. #4
    Join Date
    Jan 2006
    Posts
    38,429

    Default Re: Postnuptial or % in Company

    Since it is a single entity llc, he personally owns the company. Even if she cannot claim part of the actual company, his holdings are not “the company” but his personal asset.

    The company had little to no value when they married. That makes all the increased value effectively if not actually a marital asset.

    You also ignored that she contributed to the company. She worked to benefit the company and it wasn’t as an employee. Her contribution was “sweat equity” which makes it an investment on her part. Again, this makes operation a joint effort no different than if she used her own money for company expenses.

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