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Prenups can stir up difficult conversations. Here are some reasons you may want a prenuptial agreement and some things to consider when drafting or before signing a prenup.
Opportunity: Protect the rights your children have to your assets.
A prenuptial or premarital agreement can protect certain assets beyond just a divorce. Typically, upon death, a spouse is entitled to a certain percentage of your estate even if you have a will in place. However, you can include in a prenup certain assets or a percentage of your estate is reserved for your children or grandchildren.
Obstacle: Give up some rights
A person could be giving up his or her right to certain assets they would otherwise be entitled to.
Opportunity: Self-employed? Protect your business.
If you own your own business, a prenuptial agreement could allow you to retain all rights in the business in the event of divorce and therefore prevent your ex-spouse from having ownership/decision-making power in your business moving forward.
Obstacle: May contribute to businesses success.
You may want to consider the role you will play in the self-owned business before you give up your interest in it. Some spouses find that they contribute a great deal of time, energy, and/or money to helping their partner’s business reach new levels of success during their marriage.
Opportunity: Separate pre-existing debt
Just as there may be disproportionate ownership of assets and wealth going into a marriage, there may also be disproportionate debts and liabilities. If one potential spouse has a great deal more debt than the other, the spouse with less debt may want to protect themselves from acquiring the other’s pre-existing debts should the marriage dissolve.
Opportunity: Protect financial interests
This is the one most people are familiar with. They think of a “prenup” and think about not giving up half or more of what they have acquired should there be a divorce. That is a valid concern. If a person contemplating marriage has inherited or acquired a significant amount of wealth, a prenuptial agreement can protect them from having to give up what he or she has already worked hard to get or keep.
Obstacle: Full disclosure. Laying all your cards on the table.
With both debt and assets, you should be up front with what you have. You may be embarrassed about how much debt you have and want to keep that a secret. However, you will have to make full disclosure of debt if you are getting a prenuptial agreement. Same with assets…you cannot hide them either.
Opportunity: Giving up your career?
Upon marriage, if you will be leaving a successful career where you have accumulated wealth, a prenuptial agreement could allow you to receive some consideration or compensation for your hard work and sacrifice before marriage.
Obstacle: A low or non-wage-earning spouse may not be able to sustain his or her lifestyle upon divorce.
If you plan on not working during the marriage or you make a nominal income compared to your spouse, you may have trouble transitioning out of the marriage or unable to live the same type of lifestyle you became accustomed to during the marriage.
It is wise to get your own attorney to review your situation and advise you before entering into a prenuptial agreement. If both parties are represented, it will help to ensure the prenuptial agreement will stand up in court should the marriage come to an end.
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