WHAT ARE THE BENEFITS OF A PRENUP?
Prenuptial agreements are not death knell for romance. On the contrary, prenups are practical solutions to dealing with the problematic topic of finances in a marriage
Find out how it can benefit you
1. Protect your Separate Property
Frequently, disputes arise over how marital property should be allocated. Prenuptial agreements can be used to provide assurance that a couple’s property will be disposed of according to their intentions. Through such an agreement, parties can designate ownership of property in the event of divorce, separation, or death of either spouse. The prenuptial agreement may provide for certain property to be transferred from one spouse to the other to create separate or joint property rights. These dispositions, and the contingencies on which they would occur, can be set forth in an organized and thoughtful manner in a properly drafted prenuptial agreement.
2. Protecting Business Assets
In cases where a business is owned by a small number of parties (e.g., a closely held corporation or a partnership), it is not uncommon for the owners to want to prevent a spouse from obtaining voting rights or claims against the business. In such cases, the owners can enter into an agreement that requires each, in the event that they marry, to execute a prenuptial agreement that provides for the prospective spouse to waive all rights to the owner-spouse’s interest in the business in the event of divorce or death. The business associates may also wish to enter into a buy-sell agreement, where upon the death of a shareholder or partner, the remaining owners are required to purchase the decedent’s interest in the business for a specified amount over a specified period.
3. Protection from other spouses debts
If one spouse incurs substantial debts before marriage, there may be a desire to protect the assets of the new spouse from the creditors of the debtor spouse. This can be accomplished in a prenuptial agreement by having the debtor spouse waive any claims to the new spouse’s assets, except in the event of divorce or death.
4. Provide for Children
A prenuptial agreement can designate responsibility to provide support for children of a previous marriage, as well as children of the upcoming marriage. This may be especially important in instances where one spouse intends to give up a career as part of the marriage arrangement. The agreement can also cover issues concerning custody of all children.
5. Pass on Family Property
If one spouse has substantial interest in a family business, it is often the desire of that spouse, as well as the family members engaged in the business activity, to keep ownership within bloodlines. This could also be the case with family heirlooms and other assets of the family. It is not uncommon for parents and grandparents in wealthy families to be concerned about protecting family assets from the claims of an unintended heir, such as a decedent’s spouse. A prenuptial agreement can be written to provide that such assets are immune from claims by the new spouse.
Most states include a provision in their probate laws preventing one spouse from completely disinheriting the surviving spouse. These laws usually give the surviving spouse the right to elect against what was provided in the will and instead takes a set percentage of the deceased spouse’s assets. Typically, the elective share is one-half or one-third of the estate Unified Probate Code Sec. 2-201, 8 U.L.A. 74 (1983).
6. Reduce Litigation Costs
Prenuptial agreements can eliminate litigation costs associated with contesting the will of a deceased spouse. They can be used to facilitate the divorce process and to provide assurance that the property will be distributed the couple’s wishes. Individuals who have experienced a lengthy, messy divorce realize that a considerable amount of wealth can be lost during a legal battle, including legal fees and the fees charged by appraisers and expert witnesses.