How to Know if You Need a Prenuptial Agreement

prenuptial

Prenuptial agreements make sense for more than just the extremely wealthy. Many middle class couples benefit from the foresight and execution of a well-drafted arrangement. While it can be difficult to discuss the possibility of divorce, it is a good idea to take stock of your financial situation and consider a prenuptial agreement if any of the following situations apply to you:

 You Own Real Estate, Business Interests or Other Significant Assets

 Those who own real property investments or shares in any land, building or business should consider protecting their interests with a prenuptial agreement that clearly lists individual possessions. In the event of a divorce, individual property or interests remain the property of the person who brought them to the marriage, so long as the agreement is properly drafted. Accordingly, if you have more than about $50,000 in personal assets, a prenup is in the best interest of both parties.

You Have a Considerable Amount in Retirement Savings Accounts

Depending on what stage of life you are in when you wed, you may bring substantial retirement savings to the relationship. If this is the case, protecting your hard-earned nest egg is an essential step in planning for a secure retirement. Consider whether you would feel it were fair to surrender half of the earnings you’ve saved over the last few decades to your spouse of only a few years, if something were to go wrong.

 As a Couple, You’ve Set Academic Goals

 Many couples enter into marriage with a verbal agreement to put each other through college or graduate school. If you’ve made any arrangement of this kind, consider putting it in writing, so that everyone’s expectations are clear.

 Either Spouse Has Been Previously Married

 Many couples who have already been divorced use and understand the value of prenuptial agreements. Children from a prior marriage, as well as aging expenses, are top concerns for these types of couples. A written contract lays out all expectations and protects existing assets from being drained for elderly-care expenses.

 One Individual Brings Large Debt

 If either partner brings substantial debt to the altar, a prenuptial agreement can shield the other person from being unnecessarily held responsible for liabilities incurred prior to their union. Debts incurred individually should be named in the contract to ensure clarity in the case of separation.

While many squirm at the idea of discussing divorce before the wedding, it is a good idea to consider a variety of financial information, expectations and scenarios upfront. A prenuptial agreement makes sense for those who have previously been married and individuals bringing assets or debt to a union.

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