One of the news blurbs that was published about the recent wedding across the pond is that Kate and William were not signing a prenuptial agreement. It is surprising given the vast wealth of the royal family, but understandable given the need to follow precedent and tradition.
But what about the rest of us. When should we consider a prenuptial agreement? It’s not a legal arrangement only for the rich. There are several reasons you should have a prenuptial agreement.
1. Own Business: In case the marriage doesn’t last, you don’t want to have to sell your business to split any assets. Or even worse, your ex-spouse could become a part owner. We always hear about the rare cases when this work but in general, I don’t think it does.
2. Retirement Plan Assets: Retirement plans are built for long-term savings. It is quite a blow to have to take funds out early to pay an ex-spouse. By agreeing these savings won’t be part of the settlement in advance, your retirement goals won’t be derailed.
3. Children from Previous Marriages: Couples with children from previous relationships may have assets they want specifically set aside for those children. Agreeing to this in a prenuptial agreement protects those assets from being considered as part of the joint estate. This doesn’t replace estate planning though.
4. Inheritance: Prenuptial agreements can also protect future assets including inheritances. If you are likely to receive a large inheritance it can be kept from being added to your joint estate with a prenuptial agreement.
5. Disparate Incomes: This is probably the reason we think of first when hearing about people getting an prenuptial agreement. People with large variances in income should agree on the maximum and/or minimum amount the wealthier pays the other if the marriage ends.
6. Debt: People are not responsible for most debts incurred by their spouse pre-marriage but you may want to spell that out in divorce agreement if your intended has a great deal of debt. Be aware that some federal debt (student loans and taxes) is not subject to prenuptial agreements.
If you have any question whether you should have a prenuptial agreement, seek legal advice. If you already dismissed it but have one of the considerations listed above, maybe you should rethink it.
After all, we don’t have all royal backing to support us in case of divorce. Would you ever consider a prenuptial agreement?