High asset divorce can diminish startup founders’ wealth

It is an exciting time for tech startups. New technology is being created and developed constantly, and there are many qualified and experienced workers in California who are eager to work in this industry. Tech startup founders who have already achieved a certain level of success in their field likely already know how important it is to have a prenuptial agreement. Founders who are still in the early days or still getting ready to launch may not realize the implications of getting married without a prenup, and then dealing with a high asset divorce later on.

California is a community property state, and as such any property or wealth acquired during marriage is considered marital. This means that all property will be split equally during divorce, even if only one spouse was primarily responsible for creating wealth. This can be a scary prospect for entrepreneurs and even investors who are working in tech, because even a single good idea can launch a startup toward success.

A prenuptial agreement can address how a couple agree to split property during a divorce, even if it is not equally. For example, if one partner is ready to launch a new startup to which that his or her soon-to-be spouse does not contribute, a prenup can specify that any wealth growth from that company will be the property of the founder and not the spouse. Similarly, without a prenup, an investor might have to part with his or her share in a business to satisfy a divorce settlement.

No one can predict the future. Even though many programmers and engineers hope that their ideas will one day earn them millions or even billions, the reality of this is hard to imagine. Just like it can be hard to imagine marrying someone that you will eventually divorce. However, it never hurts to be prepared for the future, even if a person believes that a certain outcome may be unlikely. This is why it is essential that entrepreneurs in California’s tech industry prepare for a high asset divorce even if they have yet to achieve that level of wealth.

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