Planning ahead and preparing a prenuptial agreement

November 28, 2012 (Press-News.org) Planning ahead and preparing a prenuptial agreement

Prenuptial agreements are often overlooked as useful estate planning and wealth protection documents. The reasons for ignoring these legal needs are not hard to understand, as few people want to contemplate getting a divorce or their own death. Yet rather than being a negative, creating a prenuptial agreement can provide for a family in the event of unexpected life circumstances. A prenuptial agreement can be viewed as a type of insurance policy; much like insurance, a spouse can plan for unforeseen events in the future to reduce potential wealth loss and other negatives in divorce.

Benefits of a prenup

A prenuptial agreement can:
-Establish which property is marital, meaning owned jointly by the couple, and separately owned by one spouse. This can greatly reduce friction during the marriage and vastly lower the time and expense of divorce.
-Assign debt to one spouse, freeing the other from overwhelming financial obligations.
-Create a spousal support plan so that a spouse who stays home or foregoes a career to raise a family still has financial security
-Support each spouse's estate plan, including providing for children from a previous marriage.

Supporting an estate plan

An example of how a prenuptial agreement may help to support an estate plan may be helpful. Imagine Spouse A enters into a second marriage with two children. However, she fails to create a prenuptial agreement. Under some state laws, such as in Pennsylvania, a spouse has the right to a certain "election" in the event of one spouse's death. Hence, Spouse B could elect to take one-third of Spouse A's estate. Importantly, this election occurs whether or not Spouse A had a will that left everything to her children. This could reduce Spouse A's inheritance despite her intentions.

Other considerations

While prenuptial agreements are able to accomplish much, certain considerations must be taken into account for a prenuptial to be valid. For example, a prenuptial agreement cannot pre-determine child support. If the two parties to a divorce cannot agree on child support and custody at the time of divorce, a judge will issue an order based on the best interests of the child. If a provision regarding child support is included in the prenuptial, that provision may be ignored or the entire agreement could potentially be rendered invalid.

Other issues may render a prenup invalid. For example, one spouse cannot unduly pressure the other to sign a prenup. That is why it is important to complete a prenup well in advance of the wedding date and to ensure both parties have their own attorneys. In addition, if one spouse withholds financial information from the other, the agreement will likely be rendered void.

Contact an attorney

A skilled attorney can help to determine what is right to include in a prenuptial agreement for a couple entering marriage. A prenuptial agreement, rather than being unromantic or selfish, actually shows responsibility and a commitment on behalf of the couple about to be married, and ensures that the finances of the couple are open when beginning a new life together.

Article provided by Montgomery & Zimmerer, L.L.C.
Visit us at http://www.mzlegal.com