Dr. Adrienne B. Haynes, Esq.

As Valentine’s Day approaches, I am thinking about the SEED Law client couples we’ve worked with over the years. It’s been great to learn from entrepreneurial couples and help document their wishes both for their companies and their estate. If you’re thinking about starting or growing a business with your Valentine, here are a few best practices to make sure your legal rights and obligations are as evident as your love: 

Business Governing Documents

Having the right business documentation in place with your partner can help ensure clarity for ownership percentages, voting, key responsibilities, and more. Discussing who “owns” more of the business may seem silly, but it is a vital consideration for the intended division of work and management responsibilities. If you and your partner are the only owners of the business, making sure there is a way to avoid deadlock and streamline decision making contributes to efficiency. This clear articulation may also impact other matters, such as eligibility for certain business certifications or licensures. 

Business governing documents also give couples an opportunity to discuss their exit strategies and consider the impact of life events such as disability, divorce, or death. While it may not sound romantic, considering these big topics in advance can bring you and your business partner closer. 

Marital Governing Documents

Over the years, we’ve been fortunate to celebrate with a few clients who have gotten married. If you already own a business and you decide to get married, you and your spouse may consider a premarital agreement. A premarital, or prenuptial agreement, is an agreement between spouses made in contemplation of marriage and it is intended to be effective at the time of marriage. Missouri does not follow the Uniform Premarital Agreement Act but instead applies a substantive fairness-at-execution standard. 

Some couples also choose to enter into a post-nuptial agreement, an agreement made between spouses while married. Topics that entrepreneurial couples may want to consider and document include: 

-The rights and obligations of both parties with respect to property, now owned and later acquired;

-Considerations regarding business financial and economic interests developed before and during the marriage;

-How business and personal debts or obligations will be managed;

-The disposition of property in the event of dissolution of the marriage, separation or death;

-Decisions around spousal support; 

-Gifts and inheritance; and

-The making of estate planning arrangements.

-Succession & Estate Planning

Business succession planning for couples can be complex. Partners may have different goals regarding continuity, ongoing income or involvement, and how the business impacts their personal and collective legacies. Owners should give themselves time to assess their needs and goals, review best case scenarios, and explore possible options before they design and implement a succession plan. 

For estate planning, business equity may be a significant value contributor to one’s overall estate. We encourage SEED Law client couples to document their full estate plan and implement risk mitigation measures through tools like insurance, buy/sell agreements, and non-probate transfers. 

Once the first iteration of an estate plan is complete, it should be reviewed regularly. We recommend reviewing at key moments, such as a marriage, a new addition to the family, a move with the intent to establish residency, or if you have experienced one of the five D’s:

-Reached a new decade

-Experience the death of a friend or family member

–Divorce

-New diagnosis

-Significant decline in condition

Doing business with your Valentine can be a rewarding way to make a collective impact. These recommendations can help aspiring and existing couples to make sure that they are legally prepared to grow a business together. This article is an overview of legal considerations and it does not cover every legal right or obligation, consideration, exception, or restriction. The documentation and decisions involved are complex, and should be well researched and discussed with a team of professionals before being made.

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Thanks for reading!

My name is Dr. Adrienne B. Haynes and I’m an entrepreneur and attorney based here in Kansas City. My law firm, SEED Law, has been partnering with business owners across the Northeast and the city for almost 11 years. I loved living in the Northeast and I was fortunate to serve as an Entrepreneur in Residence for the Kauffman Foundation in 2017. Together with a dedicated group of Northeast residents and leaders, we explored a community designed innovation district pilot program. I was able to present this work during a TEDxUMKC Talk on Community Innovation Design in 2020.

Over the next few weeks, I’ll be contributing articles and resources on small business and estate planning legal considerations. If you have questions, please reach out directly at adrienne@seed.legal.