Regardless of income, premarital agreements are becoming more and more common. There are many ways a premarital contract can protect your money and assets in the event of a divorce.
October 27, 2012 /24-7PressRelease/ -- A prenuptial agreement, also known as a premarital agreement, is a legally binding contract that explains how a couple's assets will be distributed if their marriage ends.
Broaching the idea of a prenuptial agreement is difficult to do in a committed relationship. It may come across as reducing your partner to a dollar figure. Nevertheless, prenuptial agreements are more and more common. Almost 75 percent of attorneys surveyed in 2010 by the American Academy of Matrimonial Lawyers said they had seen a spike in prenuptial agreements. Specifically, the poor economy left people anxious to protect their assets and money. In the age of a financial crisis, later marriages and high divorce rates, many people opt to protect themselves.
On a positive note, a prenuptial agreement can bring stability to a marriage. Specifically, it can expose core issues of a long-term relationship. People often think of financial assets when considering prenuptial agreements; however, there are other factors that the device addresses.
For example, if you want to ensure that your children are raised in a particular religious faith or that you maintain custody of your dog, you may create a prenuptial agreement to ensure that your wishes are fulfilled. Or, what if you come into a marriage with sentimental family heirlooms? You probably want to protect those, too, by keeping them in the family they came from.
If your family is blended, prenuptial agreements can help ensure that your children inherit assets from a previous marriage, such as qualified retirement plans, which might otherwise go to your new spouse.
Also, if you own a business, come into the marriage with a significant amount of wealth or anticipate supporting your spouse through school, you may want a premarital contract. You might also consider the idea if you expect a large inheritance.
Furthermore, you should talk to your soon-to-be partner about how to handle existing debts and household finances. Discussing these topics can help establish expectations in a marriage.
Without a Prenuptial Agreement
Without a prenuptial agreement, your divorce will be a product of state law. Generally, courts consider two types of property in a divorce proceeding. The first type of property -- marital property -- is income and property acquired during the marriage by either partner. Marital property encompasses salaries and bonuses that are deposited in the bank and brokerage accounts, business income, real estate and retirement benefits.
Separate property is the second type, which includes assets owned by each spouse prior to the union and inheritances received by either one of them during the marriage. Typically, you can keep the original value of separate property, but must share any appreciation with your spouse in many states.
The method for dividing marital property depends on where you get divorced. If your proceeding is in one of the nation's nine "community property" states, the property is usually split right down the middle. In the remaining "equitable distribution" states such as Florida, marital property is divvied out according to what the court deems fair. The decision may consider factors like the length of your union and whether children are in the picture.
If you are uncomfortable with your state's property division laws, a prenuptial agreement can protect you in the event of a divorce. However, it may help to retain a knowledgeable family law attorney before you construct your premarital contract. A lawyer can help you understand your property classifications in relation to your state's laws.
Article provided by Tamara K. Holden PA
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