A premarital agreement (which is also referred to as “prenup” or a prenuptial agreement) is a legal step that is commonly taken before marriage. The financial and property rights of each spouse are established by a prenup in the event there is a divorce. Although no one thinks about getting divorced while they are getting married, about fifty percent of marriages in American do end in divorce. Therefore, it is often wise to consider having a prenuptial agreement. Often prenups are used in order to protect a wealthy spouse’s assets. However, it also can protect a family business or serve other important purposes. Find out what the legal requirements in your state are for prenuptial agreements and whether or not it is right for you. How Can I Benefit From a Prenup? – Although wealthy people use prenups the most, there are many other uses for prenuptial agreements other than protecting a wealthy person’s assets. They can also be used for the following: – Avoid costly, long disputes in a divorce case – Clarify financial responsibilities and rights in a marriage – Determine how to pass property upon death – Protect a party from having to assume the other party’s debts – Protect the assets of one party Is a Prenuptial Agreement Right for You? – It is a very personal decision whether or not to enter into a prenup. Each couple is also unique. For example, one spouse might want to ensure that her family-owned business is protected in case of a divorce or a high net-worth person might want to ensure their assets are protected. There is no single solution that fits every couple. Your decision should be based on your individual circumstances. The following are some of the major benefits offered by a prenuptial agreement: – Assign debt, like credit – Establish rules and procedures for potential future issues – Reduce conflicts in the event of divorce – Avoid prolonged court proceeding, which can also involve a lot of time spent by expensive divorce lawyers – Detailing and documents any special arrangements that are made between spouses – Distinguish between what is community property and what is marital property – Support your estate plan and avoid the court getting involved to determine property distribution – Documenting the separate property of each spouse so that it is protected as separate property What May And May Not Be Included in a Prenuptial Agreement What May Be Included in a Prenup Distinctions Between Marital and Separate Property Every state has separate laws governing what kinds of property are considered as marital property and what is considered as separate property. Community property laws are used by some states, which frequently stipulate a 50/50 asset split. Upon divorce or death, the marital property is all separated by the court according to state law. To avoid having a court determine what happens to the property that you obtain during your marriage, a prenuptial agreement can be used. – Descriptions of Spouse Responsibilities – Property Distribution Directions upon Divorce – Estate Plan Protections – Protections for Keeping Family Property Within the Family – Provisions to Provide for Children from Past Relationships – Protections Against the Debts of the Other Spouse There are many reasons why you might want to have a prenuptial agreement. The following list is items that are included often in prenuptial agreements: – Settlement for possible disagreements. For example, using arbitration or mediation – Arrangements for putting each other through school – Property distributed to the survivor in the event of death, including life insurance – Savings contributions – Credit card management, including payments and spending – Arrangements for investing in certain projects or purchases, such as a business or house – Joint bank account management – Management of household expenses and bills – claims, deductions, and income for filing tax returns – Retirement benefits – Separate businesses What May Not Be Include in a Prenup Agreement What may and may not be included in a prenup agreement is restricted by state laws. The following are things that a majority of states do not allow to be included in a prenuptial agreement: – Details About Personal, Instead of Financial, Issues – Provisions That Encourage Divorce – Waiving Rights to Alimony – Decisions Regarding Child Custody or Child Support – Provisions Regarding Anything Illegal Contact Toporowska Law today to learn more.