When people start a business, one of the last things on their mind is likely to be the effect that a divorce could have on their new organization. However, due to the way that asset division works, they could end up losing a significant amount of interest in their business during a divorce, so it may be a good idea to enter into a prenuptial agreement.
When a couple divorces, they will have to go through asset division, and all marital assets will be divided between the two. If someone owns a company, half of all of the increase in value of the business that took place during the marriage may be owed to the other spouse. Additionally, since debts are split, debt collectors may be able to go after a company's assets to pay off the other spouse's obligations.
Creating a prenuptial agreement can ensure that a company and its assets are able to stay mostly or totally with one individual. Prenups can also determine how debts are divided during a divorce or if debts are shared at all.
Even if someone does not own a business, it's important to understand the effects that the end of a marriage on a person's finances. Asset division will require that a couple split up both their assets and their debts, and that may include bank accounts, real estate and retirement accounts. People may also be obligated to pay alimony following a divorce if they make significantly more than their spouse. A lawyer could explain how asset division works as well as what may be exempt from this process.