Considering that one in three of all first marriages end in divorce and that a full 50% of second and third marriages will fall apart, a prenuptial agreement can make very sound financial sense. People planning on getting married tend to be very squeamish about broaching the subject of a prenuptial--many feel that it denotes a basic lack of trust in the relationship or that it takes all the romance out of their upcoming marriage.
What Is a Prenuptial Agreement?
A prenuptial agreement is essentially a contract between two people about to wed that spells out how all assets will be distributed in the event of divorce or death. If the thought of a prenuptial makes you shudder, think of it as a business arrangement or an insurance policy and perhaps that will remove some of the emotional response. Keep in mind that marriage is a financial relationship as well as an emotional and physical one.
Who Needs a Prenuptial Agreement?
Many people believe that the extremely wealthy need a prenuptial. Not true.Your last name doesn't have to be Trump for you to be extremely protective of your own little nest egg, whatever the size. If any of the following apply to you, then you definitely need a prenuptial:
- You have assets such as a home, stocks or retirement funds
- You own all or part of a business
- You might receive an inheritance from a family member
- You have children or grandchildren from an earlier marriage
- One of you has considerably more financial resources than the other.
- One of you will be supporting the other while they go to college
- You or your partner are pursuing a degree in a potentially lucrative profession such as medicine
- You have loved ones, such as elderly parents, whom you are financially responsible for
As you can see, this covers a lot of people--and probably covers you.
How to Prepare a Prenuptial Agreement
You must make absolutely sure that your prenuptial agreement is prepared in a professional and legal manner, or it could later be declared void by the courts--Steven Spielberg and Amy Irving scribbled their prenup on a napkin; she wasn't represented by an attorney, rendering their prenup void and Amy 100 million dollars richer after four years of marriage. You should use only matrimonial attorneys who are familiar with prenuptial laws in the state in which you will live, and make absolutely sure that each of you has independent counsel. Remember that a prenuptial agreement cannot waive rights to future child support payments, and your spouse's will cannot supersede the prenup if the will leaves you less. (If the will is more generous than your prenup, you can receive more than what was agreed upon before the marriage. Be smart and protect your financial future before you walk down the isle.
