Prenuptial agreements make sense for many couples, especially since roughly half of all marriages end in divorce. For people who have built up a significant amount of wealth through business and investments or those on a second or third marriage, a prenuptial agreement should be a near-automatic.
These agreements are designed to protect you. Before embarking on a second marriage or marrying someone who has significant debt, sit down with your future spouse. Talk about finances. Talk about expectations and come to a consensus that may lead toward a prenuptial agreement.
Property division, spending agreements and estate plans
A prenuptial agreement will bring a sense of fairness to the couples involved. Here are some of the things that can be included in a prenuptial agreement:
- Property division details if the couple separates, divorces or one of them dies.
- The separation of your assets and debts from those of your future spouse. This would include real estate, investments and businesses.
- Addressing alimony/spousal support issues. This may provide details on spousal support if you die or divorce. It also may include agreement changes such as eliminating spousal support altogether.
- Estate planning matters regarding creation of wills and trusts. Some people in second marriages usually want to leave money to their children as well as their new spouse. A prenup may include an agreement that such an estate plan gets implemented once a marriage occurs.
- Death benefits distribution related to life insurance policies. You can decide whether to leave a portion or the entire life insurance amount to your children, new spouse or other beneficiaries.
- Creating spending agreements. Decisions on how the two of you will manage household expenses while you are married. Perhaps one of you makes significantly more income than the other person, and you may create an agreement in which you pay your fair share.
A prenuptial agreement provides the guidance that allows you to look out for yourself. At the same time, this document spells out the financial support you are willing to provide your new spouse and the inheritance you want to provide for your children.