Prenups: Not Just For the Wealthy
By Kluger Kaplan April 3, 2013
By Jason R. Marks
It is a common misconception that prenuptial agreements are for the very wealthy, but that is not always true. There are numerous reasons to enter into a prenuptial agreement even if you do not have substantial pre-marital assets to protect.
First, a prenuptial agreement can protect future earnings. For example, if a husband starts his own law practice shortly before the parties get married, he may have no significant assets at that time. However, the husband likely expects the firm to be successful and his income to increase. Through a well-drafted prenuptial agreement, the husband can protect the future earnings of his business in the event the marriage does not survive.
While future earnings can be protected, so can future debts be avoided. In today’s economic climate, it is not uncommon for parties to incur substantial debts during the marriage, such as credit card debt or student loan debt. A prenuptial agreement can address the parties’ respective liabilities and ensure that the debts of one party do not become the responsibility of the other. For example, if the wife is contemplating law school when the parties get married and she has to take out student loans to pay for it, the parties can agree that in the event of a divorce, the wife will be solely responsible for the debt.
Prenuptial agreements can also allow individuals to provide for children from previous relationships. Because spouses have certain rights to IRA accounts, life insurance policies and other assets, a prenuptial agreement can provide that these assets be left to the children, rather than to the spouse, who could otherwise inherit these assets in the event of death.
Given that the divorce rate in this country is still hovering at around 50%, while it is unromantic to consider what you will do in the event of a divorce, it is also practical. In fact, in cases where the parties have some assets, but not enough to spend thousands of dollars fighting over, a prenuptial agreement may allow for a swift resolution in the event of a divorce.