A Prenuptial Agreement Isn’t Just For Rich People
Prenuptial Agreement Series – Part I
It is a common misconception that a Prenuptial Agreement is only for the
wealthy. Just because you don’t have real estate like Donald Trump
or a six-figure contract like Johnny Football doesn’t mean that
a Prenuptial Agreement doesn’t have value to you. You may be protecting
your income or the minimal assets you are bringing into the marriage or
you may be protecting what you don’t even have yet.
Some aspects of a Prenuptial Agreement that apply to the wealthy can apply
to us common folks too. For instance, you can protect the assets you are
bringing into the marriage such as a house that you owned prior to the
marriage. We commonly see people use the proceeds from the sale of the
house they owned prior to the marriage to buy their new marital home.
However, just because you contributed all of these funds to purchase the
new house with your spouse doesn’t mean you are automatically going
to get all of those dollars back in a divorce. It is a frequently litigated
issue determining whether and how much of the house the new spouse is
entitled to even if he or she did not contribute anything to the purchase.
Crafting a Prenuptial Agreement to address this issue can reduce the need
for litigation and ultimately save you thousands of dollars in legal fees,
not to mention significantly shorten the length of your litigation which
comes at an emotional cost.
You may also protect your business and any new growth in your business
with a Prenuptial Agreement. It is a common misconception that just because
property, such as a business or a house, is titled in only your name,
that your spouse has no interest in it. However, your spouse can be entitled
to the appreciation in the value of assets that accrued during the length
of the marriage. This also applies to your business. So even if you are
only have a small business now or even just a side business with minimal
income, if the business becomes more successful, even beyond your wildest
dreams, your spouse may be entitled to a cut of that if you ever get a
divorce. A carefully crafted Prenuptial Agreement can preserve your interests
in the business.
A Prenuptial Agreement can also protect you from paying alimony in the
event of a divorce. You may think this is something you don’t have
to worry about because your spouse is career-driven to move up the corporate
ladder, or perhaps you spouse earns more than you do. However, sometimes
that changes over time, particularly when a couple has children. The spouse
who earned a six-figure salary with his or her focus on the next promotion
may be a stay-at-home mom or dad when the babies come.
The only issues you cannot address with a Prenuptial Agreement are custody
and child support relating to the children. Those are issues that require
a careful analysis of the best interests of the children based upon all
of the circumstances at the time of the divorce.
Even if you don’t know exactly what you would want in your Prenuptial
Agreement, such as how you would want to split assets or how you would
want to address alimony, we can talk you through it to help you craft
a Prenuptial Agreement that will protect you in the future. The best result,
of course, is that you never need it. Having a Prenuptial Agreement is
like insurance: we all hope we never have to use it, but it is there if
we need it.
to discuss your options!