There is a lot of debate about who should have a premarital agreement (a/k/a, “prenup”) and whether it is worth the trouble to ask a partner for one. In the paragraphs that follow, I will discuss the factors that you should take into account when deciding whether a premarital agreement is right for you.
The Divorce Laws in Your State
The first question you should ask yourself when determining whether you should have a premarital agreement is this: Do I like way my property will be split if I divorce without a premarital agreement? I recognize that this is a difficult question to ask because it forces you to think about the end of your relationship. But the state that you live in has already set guidelines that a judge is likely to use in the event of a divorce. Moreover, even if you live in a state that has divorce laws that you like, nothing stops your partner from moving to a state with different laws, establishing residence in that state, and then filing for divorce in that state. If you do not like the divorce law in the state where you live, or you want to make sure that your spouse cannot file for divorce in a state with laws that you do not like, then the best way to protect yourself is to take control of your future through a premarital agreement.
Your Wealth Compared to Your Partner’s Wealth
If you are wealthier than your partner is, then you can use a premarital agreement to help ensure that your partner is marrying you for you – not your money. On the other hand, if you are poorer than your partner is, then you can use a premarital agreement ensure that you are financially protected.
You Have an Ex-spouse or a Child from a Previous Relationship
For those who have been married and/or have children from a previous marriage or relationship, a marriage brings about legal and financial concerns are often very different from those that were involved in your first marriage. For example, you may have support obligations. You may also have a home or other significant assets. A prenuptial agreement can ensure that when you pass away, your assets are distributed according to your wishes.
One of the Parties has a High Debt Load
If one of the parties has a significant debt load then a premarital agreement can help ensure that the “innocent spouse” does not have to take responsibility for payment the debt in the event of a divorce.
You Own Part of a Business
If your marriage ends without you having a premarital agreement, then you spouse could end up owning a share of the income earned from your business. Business partners and potential investors may be concerned about working with someone in your situation. What’s more, you might be concerned about the prospect of sharing income, at divorce, with someone who married you after you had established your business. A prenup can ensure that your income from your business remains your separate property.