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If You Own A Business Before You Marry, Consider A Premarital Agreement To Avoid Catastrophe

Question: Before my marriage, I began a business with money given me by my parents

Question: Before my marriage, I began a business with money given me by my parents. This business has become rather successful. When I married eight years ago, contrary to legal advice, I chose not to have a premarital agreement. Now we have split, and she is claiming an interest in my business even though she has no stock ownership. My lawyer says she is entitled to an interest. Why and how can it be limited?

Answer: If your business appreciated in value during your marriage, it is probable that your wife will be entitled to an interest in the appreciation. The real dispute is the amount of her interest. On one hand, separate property plus the increase in value which you can show is attributable to passive growth should remain separate property and should not be divided. On the other hand, active appreciation -- that is, increases in value based on your wife's direct or indirect efforts and contributions -- is divisible. Your lawyer should help you limit your liability by showing you how to trace the growth of the business.

Jan Collins Stucker is an award-winning writer and editor. Jan Warner is a matrimonial, elder, and tax attorney. Both are based in Columbia, South Carolina. Flying Solo is seen in newspapers throughout the United States and can be found on the Internet at http://www.flyingsolo.com.

Please e-mail your questions to janwarner@flyingsolo.com or by mail to P.O.Box 11704, Columbia, SC 29211. To receive the American Academy of Matrimonial Lawyers "Divorce Manual," either go to "Media" area of this website and use your credit card or send $7.50 payable to "AAML Fulfillment" to P. O. Box 11704, Columbia, South Carolina 29211, and we'll make sure you receive it.

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