While planning a marriage can be an exciting endeavor, it also involves making some not-so-romantic, nitty-gritty decisions about your future. This includes deciding how to handle ownership of assets that you accumulated before tying the knot. According to some experts, the best way to handle protecting your personal assets after marriage is to create a prenuptial agreement.
A prenuptial agreement, or prenup, is not just a financial contingency plan in the event that you get divorced. It is also a way to make sure that your children from a previous relationship are protected financially if your marriage dissolves or if you pass away without a will in place. The following primer will help you understand what your prenup should contain.
Stipulations About Separate vs. Marital Property
Even if you do not have significant financial assets before you get married, you still want to protect them. In addition to making sure that any stocks, bonds, real estate and vehicles remain yours, a prenup can also protect your valuable collections. For example, if you have spent years accumulating sports memorabilia, you do not want to lose that collection in a nasty divorce, especially if the collection has appreciated in value over the years.
If you ever undergo a divorce, your prenuptial agreement will be useful in proving that your pre-existing assets are separate, not marital, property. In general, separate property comprises property, gifts, inheritances and some types of lawsuit awards acquired before marriage.
The exact definition of separate property varies by state, so it is important to obtain advice from an attorney on what things you can classify as separate property in your prenup. These items will not be subject to the court rulings on the division of property if you get divorced and have a prenup in place.
Protection for Your Business
If you have spent years building a business and a brand before you got married, you want to make sure that, if you get divorced, the business remains yours and does not become shared property with an ex. This is especially important if your business is the most valuable asset you own and the primary source of your income.
While it makes sense to have marital property split 50-50, you probably do not want that to happen to a business that you built from scratch.
In addition to setting out the terms of business ownership in your prenuptial agreement, you may also want to hire a business adviser to help you and your lawyer draw up a shareholder agreement as well if you plan on hiring your spouse or involving them in running the business in a subordinate role. Airtight prenups and shareholder agreements can help save your business from suffering the consequences of a divorce.
Considerations for Your Children From a Previous Relationship
If you have children from a previous relationship, protecting your assets with a prenup is not just about making sure you keep your money for your own personal use. You do not want your kids to lose out on getting an inheritance because an ex refuses to share marital property.
In addition, you want to make sure that the assets you acquired before you got married go to your children, not your ex, if you pass away. Without a prenup, your surviving spouse or your ex's relatives can decide to exclude your kids from receiving what they deserve, especially if you did not leave a will.
You can avoid these issues by including provisions for your children in a prenup. This will prevent your spouse from interfering with your plans to provide for your children. You will also have peace of mind that heirlooms passed down though generations will not be confiscated before you can gift them to your kids.
While writing a prenuptial agreement is not a romantic activity, it is a necessary one. So put your emotions on the back burner and call an attorney at a law firm like AMS Law Group to get the ball rolling before you walk down the aisle.