As the spring wedding season draws near, a premarital agreement may not be part of your wedding planning, but in certain circumstances, it should. You don’t necessarily need to be wealthy to need a premarital agreement and oftentimes those who are not need it the most. Here are some circumstances where having an agreement in place can be important.
You have children from a prior marriage or relationship?
Your premarital agreement can address what happens to your assets in the event of your death during the marriage, or to your income and property if the marriage ends in divorce. Without a premarital agreement, your spouse may receive or become entitled to property that you’d rather have go to your children or grandchildren.
You have loved ones you want to take care of, such as parents or a special needs child
If you have children, parents, or others who depend on you, be sure you have resources to care for them, regardless of what happens with the marriage. Consider whether you need to alter the default rights that your spouse acquires automatically.
You have a valuable license or degree, or will be supporting your spouse through college or grad school?
A spouse’s rights with respect to the benefits attributable to the other spouse’s degree or license vary from state-to-state and should be considered. Premarital agreements can address a spouse’s rights to the other spouse’s earnings and conversely can protect the earnings of a spouse who earns a degree or who becomes economically dependent to help the other spouse obtain a degree or license.
You own a business or part of a business
“For business owners, the importance of a prenuptial agreement can hardly be overstated. An owner’s divorce can have a devastating effect on a business, its other owners, and its employees. Without a premarital agreement, a divorce could result in a change in ownership in the business, a diversion of the business’s resources to fund the buyout of the divorcing owner, unwanted publicity about the value or assets of a business, and an unproductive distraction for a business’s owners and management.
You might receive an inheritance or a substantial increase in income
Even if you don’t currently have wealth or special property to protect, if you expect to receive such in the form of an inheritance or an increase in income, you may want to consider a premarital agreement that addresses each spouse’s rights to gifts, inheritances, and income.
One spouse is significantly wealthier than the other spouse
If one spouse is going to be economically dependent or has special or substantial assets to protect, a premarital agreement can help protect a spouse’s interests.
You have assets such as real estate, investments, or retirement funds that you wish to preserve
If you have a particular asset or property that you want to protect, such as real estate, a retirement fund, or property of sentimental value, you can use a premarital agreement to preserve your rights to such assets.
You want to try to avoid a protracted battle over assets during a divorce
Premarital agreements, while often unpopular, can provide invaluable clarity about how each spouses property and income will be divided if a divorce occurs. Premarital agreements can limit or eliminate the extent to which spouses can get each other’s property or income, which can reduce the incentive to engage in extensive litigation over each other’s property (or penalize it). It is not uncommon for spouses to fight over each other’s property until it’s gone. A premarital agreement can make this less likely.
If you fit one or more of the situations described here, you may benefit from having a premarital agreement. Premarital agreements can be sensitive subjects, so it is usually best to talk about them well in advance of the wedding.
The following article is informational only and not intended as legal advice. Speak with a licensed attorney about your own specific situation. © Copyright 2011 MacElree Harvey, Ltd. All rights reserved.
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