Pros and Cons of Prenuptial Agreements
From time to time, we hear of a celebrity couple getting divorced and they never entered in to a prenuptial agreement before marriage. For example, Larry King and his wife Shawn King filed for divorce in 2010. Larry King’s estimated net worth was 144 million dollars. With no agreement, Shawn King stood to take half of the estate due to California family law. Luckily, the two reconciled and did not have to undertake an epic legal battle.
What is a prenuptial agreement?
A prenuptial agreement is a contract between two people who enter into a marriage. In this contract, the two parties lay out in specific terms how they want their property divided should they divorce. You can also decide how much spousal support will be paid. Two things that cannot be negotiated in the prenup are the grounds for the divorce and the amount of child support that will be paid.
Who should have a prenuptial agreement?
In the past, prenuptial agreements were seen to be an instrument used by the wealthy. Recently, more and more middle-class people have used them in their marriage if they have something they want to protect. Things like property, retirement accounts and/or pension benefits and even children can be sheltered.
If you earn more or possess more assets than the other party, you are definitely a good candidate for a prenup. Also, if you know that your earnings will increase significantly as you move along in your career, you should probably have a prenup.
Pros of getting a prenuptial agreement
Deciding to sign a prenuptial agreement before your marriage is an individual decision. Each case is different, here are some benefits to consider:
* each spouse’s individual property is defined and protected
* define what is marital and community property
* allocate debts (credit cards, loans, tax bills, mortgages) to the proper spouse so one spouse does not get saddled with the debt that the other brought into the marriage
* reduces disagreements and extensive court proceedings (and attorneys’ fees) during a divorce
Cons of a prenuptial agreement
Here are some of the negative aspects:
* It is not a romantic thing to think about as you plan your wedding
* bad timing…remember, you can always draft a postnup after your wedding (you will need to consult with an attorney because these do vary from prenups)
* a court can set aside any part of a prenup that it deems to be unjust (such as alimony agreements)
Is a prenuptial agreement right for me?
Here are some questions to consider when assessing whether or not a prenup is right for you:
* Do you own property (land or houses)?
* Do you make over $100,000 per year?
* Do you own a business?
* Do you have a large pension?
* Do you have large assets?
* Do you or your spouse plan to support the other while he/she studies for an advanced degree?
* Does your estate name beneficiaries other than your spouse (most likely your children)?
If you answered ‘yes’ to one or more of these questions, a prenuptial agreement could be the right move for you. If you are unsure, you should talk with an attorney in your area who can help lay out all the options for you and your specific situation. Whether or not you ever get a divorce, sometimes a prenuptial agreement is a good idea.
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