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Want to start a business? You need an agreement with your spouse

Businesses are all about contracts. If you are an entrepreneur trying to start a new company, you probably have contracts with everyone from your future landlord to your suppliers or clients.

One person that you may not think about negotiating with is your spouse. However, when you start a business, you take on a serious risk and try to build someone for the future. Your spouse also has to assume some of that risk because it will affect your household.

When you are in the planning stages of a business or shortly after you start the company, it is a good time to talk with your spouse about creating a postnuptial agreement.

A marital agreement protects the business and your spouse

Postnuptial agreements can be useful for many different situations. They can help a couple redefine their expectations or put problematic behavior in the past. They can also help protect certain property and limit the liability of either spouse due to the activity of the other.

Some of the risks associated with starting a business include its eventual failure and all of the implications that would have for household finances. A postnuptial agreement could establish the business as your separate property. This protects your spouse by shielding your spouse’s income and assets from claims against the business. It can also protect you and ensure that you won’t have to share the ownership of the business with your spouse if you divorce later.

For the agreement to stand, it has to be fair to both of you

Simply avoiding the liability of personal assets may not be enough of a valuable consideration for your spouse waiving any right to the business or its future revenue. You may have to think carefully about things like support or allocating other assets to your spouse if you divorce to compensate them for the value of the business.

The exact terms that you set will depend on your relationship, other assets and the projections for the company. Drafting a postnuptial agreement can protect both of you and can take a little bit of the stress involved with starting a business off of your relationship.