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Do I Need a Prenup If I Only Have an Idea for A Business, But Haven’t Yet Gone into Business?


Prenuptial agreements today are not just about physical assets that you already have, but also ideas that may come to fruition one day; especially when it comes to business (read: tech) startups. This is very important; given that anything that is not claimed as separate property in a prenup will be distributed equitably; pursuant to Florida law.

This is not only important to the business’ founder, who comes up with the ideas, but also their investors, who signed up for working with very specific individuals under very specific circumstances. This is why more and more young couples are not only insisting on prenuptial agreements, but also on working with attorneys who have experience specifically addressing a startup that could one day be worth billions. People want to make sure that their passions remain theirs.

And yet, if you do not work with an experienced attorney, unfortunately, that doesn’t necessarily mean smooth sailing when it comes to divorce: If these agreements are not drafted properly, judges can throw them out in court.

Ensuring That The Founder’s Ex Does Not Control The Board Or Company

Venture capital firms in particular usually demand legal language that protects their investments in the event that the founder’s divorce causes a portion of their shares to go to an ex-spouse. Some even demand that founders and partners sign spousal consent forms. which specify who gets to vote for board members and how shares are controlled. This is so that if the founder’s ex ends up with company shares, they still cannot exercise significant control over the company after the divorce. Part of this also has to do with making sure that people do not become involuntary business partners with someone they do not know and who may not be qualified.

As a result, without a prenup, founders typically have to find a way to negotiate keeping more of their shares; perhaps by providing their ex with more funds or other assets and investments. In this endeavor, it is important to note that stock that is publicly-traded can make divorce negotiations much easier. For example, Amazon.com’s founder recently divorced and kept 75 percent of the company’s shares, as well as voting control of any shares passed onto his ex spouse.

Carefully Select Your Attorney

It is also crucial to work with an attorney who specifically has experience addressing how a startup is valued, as it may have zero revenue or profits years before an initial public offering, while later being worth billions or even going under. Without an attorney who specifically has experience in this area, it can be difficult to deal with a large asset that illiquid, especially when one partner knows a lot more about that asset than the other.

If you live in Florida and have any questions about prenups—including those designed to protect startups—contact our Orlando family attorneys at Greater Orlando Family Law today to find out how we can help.




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