If you are considering getting married, you may be wondering whether it is worth it to obtain a premarital agreement, and you are not alone. More and more people are considering the possibility of getting a premarital agreement. Premarital agreements may seem unromantic, or only something that extremely wealthy people need to get before getting married. On the contrary, using a premarital agreement can help people of all different backgrounds prevent negative financial complications after a divorce.
Premarital agreements, also called prenuptial agreements, are legally binding contracts between two different people before they get married. These agreements create an outline of the property rights and financial rights of each partner should the couple get divorced. Essentially, premarital agreements can protect your pre-marital assets.
Premarital agreements give couples the right to determine ahead of divorce how they will split their property during a divorce. One of the main goals of a premarital agreement is to allow you as a couple to decide how you will divide up your property if you get divorced. As long as the premarital agreement is valid, you will not need to wait for a judge to go through the process of dividing up property.
Historically, premarital agreements have often been popular for couples when one or both spouses are well-off. Sometimes, when one spouse is anticipating a large inheritance or is extremely wealthy, they will protect their inheritance from their spouse, should they become divorced. When a person is from a family that generated wealth, families may suggest that the couple seek a premarital agreement.
Premarital agreements are not just for the rich and famous, however. Couples with an average income can also benefit from these agreements, and indeed, more people than ever are considering them before marriage. There are several different situations that justify taking a serious look at a premarital agreement, such as the following scenarios.
When one or both spouses own a business, figuring out what to do with the business after a divorce can be an extremely complicated and difficult process. If you have spent a significant amount of time and money building up your business, or you plan on investing a significant amount of money into a business in the future, you can protect your assets by signing a premarital agreement. Even if your business is a startup that is not extremely valuable now, at the time of your marriage, it could turn into a profit-generating, successful business down the line.
Even if all you currently have is business debt, creating a premarital agreement can still be valuable. If you are both ambitious and have plans to go places in life and become successful, the premarital agreement can help you protect your assets. Try to think about yourself 15 to 20 years from now; many people gain significantly more assets later in life.
If you are getting married later in life, you may have already saved a significant amount of money into your 401(k) and other retirement investments. Perhaps your soon-to-be spouse is not as financially responsible or has significant debt. You may wish to ensure that you are provided for in your retirement, even if you get divorced.
If you have an adult child with special needs, you may have understandable concerns about making sure your adult child is taken care of throughout his or her life. Many special needs parents are worried that if they get a divorce, they might lose a substantial amount of their assets that they planned on passing on to their adult child with special needs.
You may not have a child with special needs, but you may have children from your first marriage. Your children should definitely be part of the financial equation when you consider signing a premarital agreement. If you pass away or get a divorce, the premarital agreement will help you add another layer of protection in court to protect your children. With the increasing costs of living and getting a college education, the more you can protect your financial assets, the better.
Signing a premarital agreement can help you through the divorce process, should you end up getting divorced. Strangely enough, by signing a premarital agreement, you are both agreeing to make a potential separation and divorce much less stressful for you and your family.
Instead of having to start from scratch when deciding how to divide up your assets, you will be able to refer to your premarital agreement to see how you will divide up property. When a legally valid premarital agreement is in place, the family court judge presiding over your case will enforce the terms of the premarital agreement.
If you are a person of modest means who is marrying a wealthy individual, a premarital agreement can help you protect yourself. Your spouse’s wealth may be protected through trusts or other legal means. It can be difficult for a spouse without much money to get through all of those protections to recover a fair amount of money after a divorce.
Additionally, if your spouse passes away before you, your spouse’s wealth could skip over you and instead pass to your spouse’s children, leaving you dependent on the generosity of your late spouse’s children. By creating a premarital agreement, you can ensure that you, as the spouse with less income, could benefit from the protection that only premarital agreements can provide. You will be able to help ensure that you maintain your lifestyle after a potential divorce.
Are you considering creating a premarital agreement? If so, Gailor Hunt Davis Taylor & Gibbs, PLLC is here to help. We have helped many couples create premarital agreements throughout the greater Raleigh area. Contact us today to schedule your initial consultation.