If you own a piece of your family business In Missouri, and you are married, it is vital to consult an estate planning attorney to protect your assets.
For example, do you know which types of property you should keep separate as a married person? Or how to prevent your interest in the family business from becoming community or marital property? How about the best way to guarantee your children from a previous marriage will inherit your property when you die?
These valid concerns and others are common to married individuals where one spouse has ownership in a family business.
Separate v Marital Property
Generally speaking, property owned by married individuals is classified as either marital property (community property) or separate property, the difference being the rights each person has to that property.
In most cases, separate property refers to property you owned prior to the marriage. This may be a gift, an inheritance, a property trade, or real property. The main reason why it may be smart to retain the property as separate is to avoid having to sell or divide the assets in a divorce.
But the laws are not so simple. For example, a separate piece of real estate can remain separate if you get married, but any increase in the value of that property may be considered marital property that can be divided in divorce. If you and your spouse live in the property, improve the property, or sell the property, rent the property, or purchase goods and services to support the property during your marriage, the property classification can change from separate to marital, increasing your risk of loss.
Maintaining Business Ownership as Separate Property
If you owned part of your family business prior to getting married, it is wise to maintain that ownership as separate property, especially if you have children from a previous marriage, so that control of the business remains divided among yourself, your parents and your siblings, with an inheritance for your children. It is important to note that the mere act of retaining stock in your name is likely not a strong enough measure to guarantee your business interest will be immune from division in the event of a divorce.
To protect your rights and your stake in the family business, you will need the services of a qualified estate planning attorney to draft a legal document known as a prenuptial agreement which will, in part, prevent mistakes that can occur when attempting to keep property separate.
While the idea of a prenuptial agreement may not be romantic, neither is losing your business ownership or property in the event that your spouse challenges your rights in a divorce or other legal proceedings.
In St. Louis, estate planning attorneys at Quinn Estate & Elder Law are available to help.