The news and media are loaded with stories about messy celebrity divorces involving prenuptial agreements. While it may seem that only extremely wealthy individuals - or superstars - enter into prenuptial agreements before tying the knot, that simply is not true.
While not everyone needs a prenuptial agreement, there are certain times when it may make sense to put an agreement in place before saying "I do."
If You And Your Marriage Partner Have Unequal Assets
When one person comes into the marriage with significant financial assets, or if one party enters the marriage with substantial debt, a prenuptial agreement may be a good idea.
During a divorce, property is divided based on what courts deem as most equitable, and they can have wide discretion when making this decision. A prenuptial agreement will lay out how property is to be divided - or preserved for one or both parties - in the event of a divorce and can avoid a party losing substantial assets or taking on substantial debts.
If You Own A Business
Entrepreneurs often benefit from prenuptial agreements. During a divorce, all property is divided - including businesses interests, even ones that were built or acquired before the marriage. Without a prenuptial agreement safeguarding your business, there is a risk that a divorce will cause it to be sold and the profits divided, or land you with an unwanted business partner: your ex.
If You Have Children From A Prior Relationship
Unless you have a will stating otherwise, your spouse typically inherits some or all of your assets upon your death. For people who have children from a prior relationship, this can pose the potential of disinheritance. A prenuptial agreement can include terms to ensure your children are not disinherited by your new spouse. However, the best way to protect children against this danger is through an estate plan utilizing a will and possibly one or more trusts.
If You've Been "Burned" Before
If you've been divorced before, you know how long and costly the process can be. Many people choose to create prenuptial agreements before their second or third trip down the aisle. Having a prenup in place will help streamline the divorce process, and can help reduce the time, cost and stress of divorce.
If you are engaged or contemplating marriage and any of the above situations are applicable, you may benefit from a prenuptial agreement. For more information about the benefits of prenuptial agreements, contact an attorney experienced in drafting and negotiating prenuptial agreements.