Last time we spoke about how mentioning finances within a relationship is a difficult subject to broach. Even though everyone may not need a prenuptial agreement to divide property, the conversation can be a good jumping off point for a discussion about finances. In our last post we also mentioned how there are six general circumstances when a prenuptial agreement can prove useful. We said that in circumstances of divergent assets and divergent debt, a prenuptial agreement can be beneficial. In today’s post we will discuss the other four general circumstances.
The third circumstance where a prenuptial agreement can be beneficial is when the two partners in the relationship have vastly different income levels. When partners earn different amounts in a marriage it normally does not matter since the expectation is to share. If the relationship ends, a prenuptial agreement can set a minimum or maximum limit on what the higher earner would give or the low earner would receive. Generally, judges will not enforce agreements unfair to the low-wage earner.
If one or both partners own a small business, a prenuptial should be considered. A prenuptial can protect business assets and the non-owner spouse can be protected from the liabilities of the business. Prenuptial agreements can also be helpful for second marriages because the agreement can assert who pays what expenses of children from a previous marriage. A prenup can also decide how assets will be divided at death or divorce. A prenup should not replace an estate plan. Finally, a prenup can be useful if an individual knows they will inherit money or assets.
Source: Los Angeles Times, “Six situations in which you may need a prenup,” Kathy M. Kristof, 4/24/11