If a spouse operates or owns a family business, one strategy to protect that business would be to enter into a marriage contract that contains a waiver by the non-owner spouse of the owner spouse’s interest in the business, whether the business was owned prior to marriage, or whether it is anticipated that one spouse will take over the family business in the future. The contract can also include a waiver of any claim for the future increase in value of the business over the course of the marriage.
Two important considerations involved in drafting a waiver include:
- (a) the business owner must provide full financial disclosure to the non-owner spouse regarding the business’ present value and its future value if known, and
- (b) each party must receive independent legal advice.
The financial disclosure needs to include the current value of the business, and any future value (if known). It may be necessary to consult a business valuator, depending on the size of the business.
Takeaway:
- To ensure that there has been a full disclosure of the value of a business interest at the time of the signing of a waiver in a marriage contract, it may be prudent to consult a business valuator.