Creating Prenuptial Agreements
In the last decade, divorce attorneys in the United States have reported a significant increase in the number of requests for the creation of prenuptial agreements for their clients approaching marriage. Just ten years ago prenup agreements were rare and today they have become so common that they are considered a very acceptable way for both spouses to protect assets at any age. At the same time, divorce attorneys also noted an increase in the number of requests to include pensions and retirement accounts in prenuptial agreements. In an uncertain world with an uncertain economic future, more people appear to be thinking about protecting their assets in the event that their marriages end in a divorce.
Reading the news, it seems nearly every celebrity who gets married these days employs a prenuptial agreement to help protect their assets in the event that their marriage ends in divorce. Now the practice seems to be moving toward average people with modest assets who are taking steps to address the situation. Obviously, there are no hard and fast rules as to who does and who does not actually need a prenuptial agreement, but anyone considering getting married might want to consider entering into a prenuptial agreement if they fall into one of the following categories.
Business owners and people with substantial assets should probably consider entering into a pre-nuptial agreement before getting married. Substantial assets including real estate, stocks, CDs, bonds, cash, or other retirement accounts acquired prior to a marriage are usually considered the separate property of the individual owner and do not change into marital or community property because someone gets married. Because there can be exceptions to the general rules, a pre-nuptial agreement would clearly list of all of a person’s separate property, and state in writing that both spouses agree the assets are to remain separate property.
Even if a person does not have a lot of wealth when they get married, if they stand to inherit a lot of money or property when their parents die, they probably need a prenuptial agreement to spell out that the inheritances will be the separate property of the recipient,
In the case of marrying someone with a lot of existing debts, much like protecting assets, a prenup agreement can also be used to protect a person against their spouse’s debts. A good prenup will clarify that the debt was established prior to the marriage and that the other spouse is not liable for that debt in the event of divorce.
If a person already has children at the time of a marriage you have children, they might want to consider a pre-nuptial agreement so that in the event of death or divorce their children will be taken care of.
Although most prenuptial agreements are binding for the full length of a marriage, it is also possible to include a stipulation that the prenup will only remain in effect until a certain future date. This stipulation known as a prenuptial sunset clause will specify that the prenup agreement and terms will not be valid after a specified number of years of marriage. The most common reason for a sunset clause is an agreement between spouses that the prenup should be considered void once a marriage has lasted a set length of time. When one spouse has more wealth than the other, a prenup will obviously protect prior assets if the marriage turns out to be a mistake. However, the less wealthy spouse might not agree to sign a prenup unless it will become void due to a sunset clause after the marriage has lasted for a specified number of years. Prior prenup agreements between spouses can have a positive result as long as both spouses are fully aware of the terms and length of the agreement.