Legal Question in Business Law in California

My business partner is soon to be married. We are 50% partners. Do I need a prenuptial agreement in place to protect my portion of the business? Or, will a waiver agreed and signed by his future wife suffice?


Asked on 1/24/17, 11:48 am

3 Answers from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

You might want to submit your question under the family law heading. My understanding as a non-specialist in this area is that marriage does not immediately impact the ownership of a business ownership previously held by one of the couple, but that the non-owning spouse may gradually acquire what's called a "pro-tanto interest" over time as community assets become commingled into the business, such as by investment of community funds into the business. However, you'd presumably still have 50%, and the new wife wouldn't automatically become a partner or be entitled to vote on company business matters. Still, the overall impact of the marriage may have an impact on how your partner behaves and how business proceeds in the future. I'd say the impending marriage warrants a trip to visit your lawyer(s) or, if you don't have one, find a family-law attorney near you who also has some business-law experience in the context of family businesses.

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Answered on 1/24/17, 12:50 pm

Mr. Whipple has the right idea, if not the exactly correct specifics. The marriage affects your partner, not you directly, but it can have an impact on your partner's participation in the business and it can get very complicated in the event your partner divorces. Unfortunately you can't just have a signed waiver from the bride to be that covers all the possible contingencies, and an agreement between you and her would not be effective anyway. One option would be for your partner to have a prenup. Again, however, it is a challenge to draft a prenup that will cover all contingencies that might arise as the business moves forward and then something happens to their marriage. You also have to consider his untimely death and her inheriting his interest, or future children. What I generally recommend in this situation is that you either form an LLC, or at the very least have a well qualified business attorney who understands succession of business interests draft you a really good partnership agreement. In either case an attorney who understands these issues can include provisions that prevent the spouse or heirs from exerting control even if they acquire claims on your partner's interest in the business. I usually also include mandatory or optional buy-out provisions, and depending on the value of the business, sometimes mandatory life insurance provisions to make sure there is a fund to finance a buy-out if needed. This is a good time to spend a reasonable amount on some lawyer time, rather than a whole LOT of money on lawyers down the road.

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Answered on 1/24/17, 2:02 pm
Keith E. Cooper Keith E. Cooper, Esq.

You and your partner should enter into a written partnership agreement or form an LLC before the marriage. The key point in either of these is that a partner/member interest can't be transferred in any way without the other partner's permission. In case of death or divorce, the spouse/heir(s) would share only in profits and not have a vote in the running of the business. You need to have an experienced business lawyer do this for you; trying to do it yourself without an attorney might not achieve the desired result.

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Answered on 2/06/17, 1:42 pm


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