Nager has seen several instances where prenuptials are discussed among family members, but the subject goes no further because the adult child can't summon up the nerve to broach it with his or her intended. If an agreement can't be reached or the discussion can't get off the ground, there are alternatives to ensure that the stock stays in family hands.
Nager suggests a shareholder's agreement with a buy-sell provision that clearly delineates the circumstances under which stock is bought back from shareholders--divorce being one of them. He also suggests that if no stock has been distributed to the adult children yet, the parents should put the stock in trust for them. "The agreement can be written so that in-laws have no rights to trust assets," he explains.
Making plans to protect the business in the wake of a divorce shouldn't prevent you from valuing in-laws as a tremendous resource for the business. "Excluding in-laws from information creates problems," says Hubler. "Not only that, it robs the business of the unique perspective spouses can bring."
Whatever approach is taken, Wolfson counsels, "the older generation should always listen to and acknowledge the younger generation's concerns." That's sound advice for any family business.