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?
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I believe in a prenuptial agreement, if there is an imbalance of assets or earnings in a marriage. For the record, my wife and I did not have one because our earnings and assets were somewhat equal. Although many would say why plan the divorce before you marry, I think it clarifies the money aspect so everyone understands.
I guess it would be a good idea if one soon-to-be spouse had quite a bit of assets in comparison to the other soon-to-be spouse. However, when I got married, both MR. LH and I were even-Steven (young and didn’t own diddly). I think the older you get, the more likely a pre-nup would be needed.
We got married right out of college, and the only thing I had to share was my debt. So, obviously, no prenup for us. However, if I got married after I was established and my fiancee was really successful, I don’t think I would have a problem with a prenup. Everyone wants to think their marriage will last forever. However, statistics show things don’t always work out as planned, so I wouldn’t have a problem with my fiancee wanting to protect his assets.
I don’t know, it seems so cold. If I had a lot of money and was worried about the other person taking it, should I be getting married then?
I would consider it if I hit some of those categories lol….luckily I got married broke!
I strongly believe in planning for the possibility of divorce. It’s hard to argue with 50% odds. However, I think a pre-nup is planning for failure. Other strategies like equally funding retirement plans, and joint ownership of asstes are wise moves.
@krantcents, I agree with you although we didn’t have one either. I think it would have been good because we both had children.
@Little House, Your decision not to have one made sense for you and your husband. Your plan was to grow rich together.:)
@ Everyday Tips, Very practical outlook. Of course, you are a PF blogger!
@ Susan, it may seem that way but I think it is just being practical. By discussing this in the beginning, I think you’re prepared if your marriage is the one out of two that doesn’t last.
@ Evan, so it’s a joint journey to millions.
@ Hunter, No argument with the strategies you have for equal savings but if your financial pictures were greatly unbalanced, I hope you will consider it.
My husband and I were pretty evenly matched financially, so we didn’t need one. Honestly, it would be hard for me to imagine marrying someone who’s up to his eyeballs in debt either. I just don’t think we’d be compatible given how frugal I am.
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