On behalf of Bebout, Potere, Cox & Bennion, P.C. posted in blog on Friday, July 14, 2017.
Some people think prenuptial agreements are only good for the wealthy. Others think they take the romance out of marriage. However, agreements of this kind are not based solely on income and assets.
Prenups have more to do with open discussion and planning for the future. There are many good reasons for a couple to think about having a prenuptial agreement. Here are five of the most common considerations:
1. Top money earner
One partner may make much more money than the other. If divorce should come about, a prenup can limit the amount of alimony the top earner should pay.
2. High debt load
Many young people are struggling with the need to pay off college debt. If this is the case for one partner, the other partner will probably not want to be responsible for paying any portion of this obligation if the marriage ends.
If one partner has been married previously, he or she may already own a home, be paying child support and meeting other financial obligations. The prenuptial agreement can address asset distribution and ongoing care for both present and previous families in the event the partner should pass away.
4. Business ownership
One partner entering the marriage may own part of a business. In the event the marriage ends, the prenuptial agreement can prevent the other partner from acquiring any ownership in the business.
5. Quitting a job to raise children
If one partner makes the decision to stop working in order to raise a family, there will obviously be an impact to income. You can structure the prenup to show that the financial cost of raising children is to be fairly shared by both partners.
Drafting peace of mind
The planning an engaged couple puts into a prenuptial agreement is great for communication, which happens to be one important building block for a good marriage. Addressing the matter of dividing assets and debts can give a couple peace of mind as they go forward at a time when they are most in love and in tune with each other.