PRESERVING GENERATIONAL WEALTH: PROTECTIONS FOR MARRIAGE AND DIVORCE

At Broder & Orland LLC, Connecticut’s largest Family Law firm with offices in Westport and  Greenwich, we regularly counsel families about preserving generational wealth in the context of  upcoming and future marriages. While no one enters a marriage expecting to be divorced, the statistics  reflect a significant percentage of failed marriages. Whether a family has managed to preserve wealth  throughout the years or is looking to protect more recent wealth, perhaps derived from a successful  business, employment or investment, it is important to discuss ways to safeguard and protect  accumulated and ongoing wealth. Whether the goal is to protect an ongoing family business or to  protect family trust interests, it is important to be proactive in exploring the landscape. With vast  experience in our practice, we recognize that having conversations with children about safeguarding  wealth, particularly when a marriage is on the horizon, can be very sensitive and difficult. We have been  successful in counseling families in ways to address these concerns. This may involve:  

  • Prenuptial Agreements: One of the most common objectives of a prenuptial agreement is to  ensure that assets owned by a party prior to the marriage and/or assets that may be received  during the marriage through inheritance and trust distributions, including any appreciation in  the value of such assets that may occur during a marriage, will be solely retained by that party in  the event of a divorce. Where generational wealth is involved, the negotiation, preparation and  execution of a well-crafted prenuptial can be critically important for ensuring that generational  wealth is preserved and maintained in the event of a divorce, and we regularly negotiate and  draft such agreements on behalf of our clients. 
  • Post-Nuptial Agreements: Postnuptial agreements (which are similar to prenuptial agreements,  except that they are entered into after parties are marriage) can also be critically important for  ensuring that generational wealth is protected in the event of a divorce. Postnuptial  agreements often become desirable in instances where one spouse accumulates substantial  wealth after the marriage date in a manner that was not necessarily anticipated at the time of  marriage, such as starting a business that becomes highly successful or receiving a valuable  inheritance from a family member.  
  • Family Business By-Laws: Absent appropriate protection, generational wealth derived from a  successful family business can be exposed when a family member who holds an interest in such  a business divorces his or her spouse. We coordinate with business counsel on integrating  provisions into a business’s by-laws that serve to shield business interests from being subject to  distribution to a non-titled spouse in the event of a divorce.
  • Trusts: Families can also protect generational wealth through the creation of trusts, and when a  family member is getting married it may be wise to create such instruments in conjunction with  the preparation and execution of a prenuptial agreement in order to ensure that these  documents align with each other. Particularly in instances where generational wealth is at  stake, we regularly collaborate with our clients’ estate planning team to ensure that prenuptial  or postnuptial agreements that we prepare work in unison with any relevant trust instruments.

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