Prudent and forward thinking individuals take steps to develop a strategy to mitigate problems and preserve the family business. This can be accomplished using a professional prenuptial agreement designed specifically to protect the family run business in case of divorce.
Prenuptial agreements in Canada do not prevent the causes and effects of divorce. However, they can help reduce the legal disputes resulting from the divorce. Many families running a business do not take advantage of a prenuptial contract.
This is not the case however if the divorcees are business partners. The divorce can become complicated and costly to resolve, in terms of accounting and legal fees. This may result in the liquidation and dissolution of the business.
With a prenuptial agreement specifically addressing the family establishment, the rights and obligations of each party in the business are clearly stipulated and legal arrangements are made to ensure the continuity of the business and the viability of its operation through its owners (former spouses) as business partners.
2. Protecting Employee Morale: Employees working in a family business are also affected negatively by a bitter divorce battle between the business owners. A prenuptial agreement will thwart any disruption in the day to day operations of the family business by eliminating legal battles between the owners/former spouses and therefore protecting employee morale.
3. Avoiding conflict between heirs: Adult heirs (adult children in a marriage) involved in the family business may take sides in a legal dispute between parents.
In addition to the personal assets, a prenuptial agreement minimizes legal disputes by stipulating the business rights and obligations of each party and by laying down the division of the family business between the former spouses. This ensures the future continuity of the family business and the sustainability of its operations.
No comments:
Post a Comment