Divorce and prenuptial agreements seem like dirty words.
That’s one reason why an engaged couple does not consider, let alone sign, a prenup.
Another reason is that most people think that prenuptial agreements are just for the wealthy. Sure, people with large incomes and sizeable assets clearly benefit from a prenup. But prenups offer advantages to those with even modest incomes or estates. Or really for those with even less than that.
In fact, prenuptial agreements serve a very practical purpose for just about anyone contemplating marriage.
Here are some overlooked considerations and advantages:
If drafted properly, these agreements clarify the financial responsibilities of each party during the marriage as well as govern the distribution of any property in the event of divorce or death of one the spouses.
Death benefits as part of life insurance policies and the right of a spouse to participate under retirement plans are often topics covered in a prenuptial agreement.
Prenuptial agreements often contain an alimony schedule or eliminate spousal support altogether.
These agreements help estate planning by determining how property will be passed on to children from a previous marriage.
But there are certain areas that are out of bounds. For example, prenuptial agreements cannot cover the care, custody or visitation of children. In addition, the right of a child to support from a parent cannot be adversely affected by the terms of a premarital agreement.
Of course, some think that prenups are expensive. However, this pales in comparision to extensive and costly divorce litigation if you don’t have a prenup.