When people think about prenuptial agreements, most may think in terms of divorce settlements, but prenups are also useful in estate planning. By determining in advance the terms of an inheritance, you can ensure your spouse abides by your wishes in the event of your death. A prenup can be used to avoid painful legal and emotional disagreements in the future, both for you and your loved ones. Between 2010 and 2013, the number of prenuptial agreements increased 63 percent, according to a recent article in The Wall Street Journal. The majority of these were used to protect property rights and estate issues.
Children from a Prior Relationship
If you have children from a prior relationship, you can use a prenup to protect your children’s inheritance by outlining how you want your estate divided. Having these agreements determined before you walk down the aisle ensures both parties enter the marriage with a clear understanding of expectations and that the children from the prior relationship will be provided for according to your wishes. A prenup also can provide a legal shield to protect the children’s inheritance from future lawsuits filed against a surviving spouse.
Expected Inheritance or Trusts
For those who expect to gain assets from a trust or inheritance, a prenup can ensure that the inheritance does not fall victim to division of assets in a divorce settlement or go into probate in the event of your death. Prenups clearly outline the ownership and transfer of those assets so both parties enter the marriage with an understanding. A client may anticipate an inheritance with understood familial expectations but those are verbal, not written, understandings. By getting those expectations in writing in a prenup, you can make certain your spouse is abiding by your wishes.
Property
People are marrying later in life than in past decades, and many already own property before entering into the marriage. A prenup can help determine ownership and inheritance of that property. For example, if you own a home purchased in a previous marriage and want to retain the property as rental income or as a future inheritance for children, a prenup takes care of that negotiation.
Family Business
If you stand to inherit partial ownership or control of a family business, a prenup can ensure that your interest is secure. Determining business interests before entering into the marriage can help avoid family disagreements and legal issues in the event of either divorce or death.
Life Insurance and Retirement Income
A prenup can be used to designate life insurance and retirement beneficiaries, as well. Whether there is a certain portion to be set aside for previous spouses, children from a prior relationship, or for a new spouse, a prenup gets that amount in writing.
Alimony and Child Support
For those who’ve been married before, a prenup is an excellent way to ensure the newest spouse agrees to abide by previous financial obligations you’ve carried.
Prenups are a good idea, and not just for the wealthy. If you are planning to marry, consider the benefits of a prenup to avoid costly and emotional legal problems for you and your family.