You may have heard about Prenuptial agreements from tabloid accounts of celebrity divorces. Although they may appear sensational, these important legal arrangements are for more than the rich and famous. When prepared correctly, a prenuptial agreement can help a couple take stock of their assets and set the stage for efficient and open communication about joint finances during their subsequent marriage.
In essence, a prenuptial agreement enumerates both of the parties assets and debts and stipulates which of these assets, or debts, become jointly held upon marriage and those that remain individual property.
While one of the most common reasons for a pre-nuptial contract, and the most notorious in pop culture, is to protect an individual’s assets in case of divorce. These contracts can be especially important when a couple’s assets are imbalanced; if one partner makes or owns ten times the other’s net worth, the presumption that each partner is entitled to one half of the total property at divorce, may not be fair.
Prenuptial agreements also have many other uses and can serve the needs of many kinds of people. For instance, a prenuptial agreement can protect one spouse’s assets from the other’s liability. For example, if a woman is a doctor in private practice, and her husband owns his own business, they may have a prenuptial agreement, as part of an asset protection plan. If the wife is sued for malpractice, her husband’s business may not counted as part of her property, limiting their joint liability and protecting his business holdings. The reverse may also true, if for example, the husband should be sued for a slip-and-fall incident.
For people who are remarrying and have children from a previous marriage, a prenuptial agreement can make lines of inheritance clear. Whereas liquid assets or a family business would default to a surviving spouse, a prenuptial agreement can specify one’s biological children as the sole inheritors of part or all of one’s property.
With people marrying later and later in life, even relatively young people, without great personal wealth, still have hard-earned assets worth protecting. Millennials getting married might consider a prenuptial agreement to keep separate assets from each partner’s established career or to protect assets from one partner’s considerable student debt.
Prenuptial agreements are as varied, unique and individual as couples. If you have questions about a prenuptial agreement, call our office. One of our experienced family law attorneys will be happy to discuss your particular situation and the options that may work best for you.