While pre-nups have a bad reputation, here are four solid reasons why they can save you and your family many future headaches.
1. There is more to lose for both of you (and your heirs)
Many people scoff at the notion of a pre-nuptial agreement when they first marry. These couples are usually young and low on assets. Understandably, such a couple is more concerned with combining their assets into something more impressive than protecting what is theirs. However, those re-marrying later in life not only have more assets (such as homes), but they are also likelier to have their own children. A pre-nuptial agreement is the best way to protect some of your key assets in the event of a divorce and to ensure that your heirs are guaranteed to receive the assets intended for them.
2. Pre-nups can help set up trusts
It is understandable that parents worry about their family being financially secure after a parent dies. One useful function of a pre-nuptial agreement is that someone with more assets than their new spouse can arrange for a trust that pays interest to the surviving spouse after they have died. When the second spouse dies, the money from that trust is then distributed among any surviving children of the first spouse. In this way, the agreement can provide someone with more assets peace of mind.
3. More versatile than a will
Skeptics of pre-nuptial agreements point out that wills can offer similar protections for heirs. However, a will is limited to someone’s death. A pre-nuptial agreement also offers protections in the event of a divorce, helping to circumvent potentially ugly family squabbles over which person receives what. It makes more sense to think of a pre-nuptial agreement as a logical extension of estate planning. Rather than looking at the agreement as a lack of trust between spouses, imagine it as a simple way for each party to protect their assets, their families, and their overall happiness.
4: Risk vs. reward
The blunt truth is that spouses offended by the idea of a pre-nuptial agreement often get over it relatively quickly. However, spouses with uneven assets facing a divorce are facing months (if not years) of ugly legal battles and extended family conflicts. A pre-nuptial agreement represents the simplest way to avoid conflicts, both inside and outside the courtroom.
Pre-nuptial agreements can and should be tailored to your individual needs and goals. An attorney can help you understand all of your options and protect your interests.
