East Lansing, home to Michigan State University, hosts a thriving tech startup scene. As an entrepreneur, you’ve invested heavily in your business. But have you considered how to protect your intellectual property (IP) if your marriage ends? Prenuptial agreements offer a solution.
Why prenups matter for tech entrepreneurs
Prenuptial agreements, or “prenups,” are designed to secure your business interests before marriage. They serve as important tools in:
- Defining premarital assets
- Addressing how to manage future earnings from innovations
- Helping prevent costly legal disputes
Michigan courts enforce them when they’re fair and properly signed by both parties. However, since judges consider each case separately, it’s essential to make sure your agreement meets all the necessary legal requirements.
Protecting your intellectual property
In most startups, the most valuable business asset comes in the form of the intangible IP. This could encompass patents, trademarks, copyrights and trade secrets. A well-crafted prenup can help ensure you retain these assets and your company, regardless of changes in your personal life.
Michigan courts may consider business assets obtained during marriage as marital property. A prenup can clarify how they should treat your company and its IP in such situations.
Creating a tech-savvy prenup
Each party needs its own lawyer when creating a prenup. This requirement can help make the agreement more legally binding in court.
When drafting a prenup for the purpose of protecting a tech startup, cover your bases by:
- Clearly defining your current and future IP
- Specifying how to manage new innovations during the marriage
- Not overlooking the potential for significant increases in your company’s value
- Adding confidentiality clauses to secure trade secrets
But even the best prenups aren’t set in stone. Courts may still review the agreement for fairness at the time of divorce. Additionally, prenups cannot determine child custody or support issues, which courts handle separately.
As your business evolves, so can your prenup. Michigan law also allows for postnuptial agreements that enable couples to adjust prenup terms as needed.
A prenup is a natural part of your business planning process, not a manifestation of doubt. To prevent it from sowing mistrust in a relationship, consider consulting a family law attorney who understands entrepreneurs’ unique needs. They can provide insight into creating a prenup that addresses your IP concerns, positions your startup for success and financially prepares your family for whatever the future holds.