Prenups Aren't Just For The Rich And Famous. 6 Reasons To Have A Prenuptial Agreement
It is a common misconception that prenuptial agreements are only for the rich and famous. The truth is, a prenup can benefit couples in a number of situations, even for us common folk.
WHAT IS A PRENUPTIAL AGREEMENT?
A prenuptial agreement (prenup) is exactly what it sounds like, an agreement entered into before marriage. It outlines how property and finances will be dealt with during your marriage and when the marriage ends, either by divorce or death.
In a prenup, spouses can agree to their own rules for dealing with property brought into the marriage, property acquired during the marriage, including earnings and other income, support, and responsibility for debts. A primary purpose of a prenup is to override provisions under state law on many of these issues. A key prenup provision is that income on separate property remains separate property rather than being community property. This is not what state law provides otherwise.
Before the marriage is the best time to give serious thought to these issues. However, if you are already married, a postnuptial agreement can still be done. Learn more about postnups here.
6 Reasons You Should Consider A Prenup
Here are a few common situations where a prenup is appropriate:
- Substantial Separate Property
If one or both spouses are bringing substantial property into the marriage, a prenup could be beneficial to retain the separate property character and income from the property. This is often a big concern for children of the parties marrying.
- Higher Income Of One Spouse
The parties should consider whether, if one spouse has a significantly higher income than the other, that income should remain community property or they should agree to classify it as separate property. There are many pros and cons on this issue that should be explored together and with an attorney.
- Multiple Marriages
This is a key reason to have a prenup. If it is a second, third, or later marriage for either party, controversy involving the children and stepchildren both during the marriage and on the death of either spouse is likely. The agreement can foresee and deal with those issues.
- Debts And Liability
If either spouse carries heavy debts or is exposed to substantial liability, the prenup can spell out protections of the other spouse’s property to the fullest extent allowed by law.
- Business Ownership
If either spouse owns their own business, the prenup can protect the separate property character of the business and its income, preserving it in the family if that is desired.
These are the top 6 reasons you may need a prenup, but there are other issues to consider as well. The best way to decide if a prenup is right for you and your spouse is to consult with an attorney.
Provisions can be drafted to address many complicated questions surrounding these issues. As a friendly reminder, leave yourself adequate time to consider these serious issues. Your lawyer will also need time to carefully draft the agreement before the wedding day. This is not something that can be accomplished the day, or even the week, before you say “I Do.”
To schedule a free initial consultation*, contact Adair M. Buckner today.
*(The free consultation does not cover actual review of documents or giving legal advice on a specific situation.)