20 May Prenuptial Agreements: Not Just for Those with Significant Assets
We’re rapidly approaching wedding season, and these days, many Bay Area couples are including a prenuptial agreement in their wedding plans. While most couples enter a marriage with the intention of spending the rest of their lives together, half of all marriages in the US end in divorce. It may seem like sabotage to be thinking ahead to the dissolution of a union before it’s even become official, but many savvy couples are also pragmatists and know that a prenuptial agreement can serve as an insurance policy against a worst-case scenario.
A prenup can protect even the smallest savings accounts, and it can also protect against the limitless worth of future investments. Many people enter marriages at early stages in their careers. The median marriage age is 25 for women, and 26.8 for men, while careers are believed to peak at age 35. It is important that there is clear, written outline, before marriage, to the entitlements of money as it grows.
Let’s imagine this scenario of a newly married couple
The husband goes back to school to get an MBA, and his wife works hard to put her husband through school—a considerable contribution to the family’s future. With an MBA, the husband will be well prepared to jumpstart a successful business career which would not have been possible without his wife’s sacrifice and hard work. In a prenup, the wife can actually specify how much of the future earning of her husband’s career she is owed, and for how long. The husband can protect himself as well, by placing time, dollar or percentage limits on what he would owe.
Prenups can be customized and negotiated for each unique situation
Prenuptial agreements can actually leave both parties in a better situation than they would have otherwise been. Let’s suppose the wife has a substantial amount of family wealth, and the husband brings no money to the relationship. One way to structure the prenup would be to limit the husband’s claim on the wife’s family assets to a certain dollar amount that would allow him to continue his lifestyle while they were married. This is mutually beneficial; the husband can continue his lifestyle yet it limits his access to the family fortune.
Many of our prenup clients are older, they’ve established careers and this may be their second or third marriage. Their lives have become more complex; they’ve accumulated assets and have children and grandchildren they want to protect. There’s also the likelihood that their future spouse also has significant assets and children of his/her own. Creating a prenup to identity how those assets will be distributed in the event something happens to them is laying the foundation for good communication that will serve them well throughout their marriage.
That difficult conversation about money…
One of our clients told us that the most difficult conversations she and her husband had were about money. A prenup forces couples to have a clear, straightforward conversation before getting married, discussing how much money each is bringing into the relationship and how much each expects to inherit. Other key parts of this conversation include identifying debts and financial goals. Many couples these days live together before marriage and are used to sharing expenses, but don’t really stop to address the larger economic picture. As with a business, each shares responsibility for their mutual long-term financial success, and a prenup is a good place to start.
Attorney review: A very good idea
Because a Prenuptial Agreement deals with the property rights of the marrying parties, it is advisable for both parties to have separate and independent attorneys review the agreement. Certain provisions, such as giving up the right to spousal support, are unenforceable if the party who later wants support (in a divorce proceeding) did not have an independent attorney explain the agreement to that party. California Document Preparers has relationships with excellent local attorneys and can provide referrals for the reviews. Combining quality legal document assistance with legal advice is an excellent use of your legal dollars.
Are you and your fiancé considering a Prenup? We know this can sometimes be difficult for couples so we’re sensitive to their needs. Contact California Document Preparers at one of our three Bay Area locations and schedule an appointment today!