Why You Should Consider A Prenuptial Agreement

Together with a restrictive shareholder agreement, a prenuptial agreement ensures that an ex-spouse will not automatically be a family business shareholder. If the subject is raised far in advance of marriage, or with children before they enter into serious relationships, it is less likely to result in arguments and hurt feelings.

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The older generation should carefully consider the manner in which a family agribusiness interest is transferred to the younger generation. It is wise to do so in a way that protects the business interest from subsequent division, dilution or redemption should a family member get divorced. FW ARCHIVE A prenuptial agreement, also known as a antenuptial or premarital agreement, in conjunction with a restrictive shareholder agreement, is the best way to ensure that the wealth generated by a family agribusiness stays within the family. Raising the issue can spark tension between the future spouses, and often their families as well, but there are ways of managing the situation in such a way as to minimise the potential for conflict.

While prenuptial agreements can be a source of strife if not handled properly, these agreements can also serve to prevent some common family business conflicts. When a shareholder signs a prenuptial agreement, the likelihood that a future spouse will gain an interest in the family farm is minimised. With this extra level of assurance, members of the senior generation may be more inclined to begin or continue to transfer ownership shares to the family member about to be wed.

Similarly, prenuptial agreements for senior shareholders contemplating a second marriage, serve to assure younger shareholders that the new spouse and his or her family won’t automatically acquire a stake in the family agribusiness. This becomes increasingly important as the younger generation increases their investment of time, money and energy in operating the business.

PROTECTING PRENUPTIAL ASSETS