Know The Law: Prenuptial Agreement Regarding Owning a Business

June 1, 2012

Q:Two years ago, I took over a small business started by my parents.  Now I am engaged to be married. Do I need a prenuptial agreement?

A:Prenuptial agreements are not just for celebrities.  While asking your sweetie to sign a prenuptial agreement prior to the wedding is not very romantic, such an agreement is a critical tool in asset protection, one that every business owner should consider.

Stock in a family business owned by one spouse is classified by the courts as marital property, and absent a valid prenuptial agreement would technically be subject to division pursuant to New Hampshire’s statutes, in the event of a divorce.

State law dictates that property will be divided equitably by the court. “Equitable” means that the property is fairly divided. All property, no matter whose name it is titled in, is thrown into one “pot” at the time of divorce and then divided equitably by the court unless there is a valid prenuptial agreement dictating otherwise.

A prenuptial agreement can not only protect an ownership interest in a closely held business, it can also provide a formula which the parties agree to use to value such stock in the event of divorce, whether by reference to a shareholder agreement or by including some formula within the body of the prenuptial document.

Once the decision has been made to enter into a prenuptial agreement, the parties must exchange complete lists of all assets. In New Hampshire, a legally enforceable prenuptial agreement must be in writing and must be voluntarily entered into after a full and complete disclosure of all relevant facts. In the event of a challenge to the validity of a prenuptial agreement, the court will closely scrutinize whether each party fully understood the agreement and whether there was full financial disclosure. New Hampshire courts considering disputes about the validity of prenuptial agreements have emphasized that each party should obtain legal advice in the drafting and execution of a prenuptial agreement.  In addition, timing is important. An agreement entered into less than one month before the wedding may be difficult to enforce.

Hiring a lawyer to draft a prenuptial agreement costs money, of course, but if you are considering marriage, and have assets you wish to protect, a prenuptial agreement is a wise investment. In the case where a family business involved, it should be pursued without question.

Jeanmarie Papelian can be reached at

Know the Law is a bi-weekly column sponsored by The McLane Law Firm.
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