Prenuptial agreements: Not just for royalty anymore
The April 29 royal wedding of Prince William and Kate Middleton is fast approaching, and amid the usual fanfare surrounding the fairy-tale ceremony, consumer advocate Clark Howard noticed something curious. There’s a great deal of urging in the U.K. media for Prince William to sign a prenuptial agreement before the wedding. Contracts specifying the division of assets are encouraged by many financial planners, particularly when property and wealth are involved.
What is a prenuptial agreement?
Regardless of the nomenclature – prenuptial agreement, prenup, prenupt or premarital agreement – a prenup is a legal contract signed before a marriage or civil union. While the terms of the agreement can vary, specifications for how community property and spousal support are to be divided in the event of divorce are most common. Provisions for child guardianship and forfeiture of assets in the event of indiscretions like adultery may also be present.
Postnuptial agreements are similar to prenups, but are formed after a couple is married.
Divorce is a fact of life
One in three first marriages and at least half of second and third marriages end in divorce, reports Bankrate, so financial experts say prenuptial agreements are a good idea.
“Marriage is not just an emotional and physical union — it’s also a financial union. A prenup and the discussions that go with it can help ensure the financial well-being of the marriage,” said New York City financial adviser Nancy Dunnan.
Contrary to popular belief, a couple doesn’t have to be Prince William and Kate Middleton for a prenup to be practical. If a person has managed to sock away a nest egg, protecting it is worthwhile.
“Those are sometimes the most jealously guarded assets because it has taken a lot of hard work to accumulate a small amount,” said Iowa lawyer Joseph Zwack, author of “Premarital Agreements: When, Why and How to Write Them.”
Signs you should have a prenup (or postnup)
According to Bankrate, if any of these things apply and you are about to marry or are already married, consult with an attorney:
- You own a home, business, stock or retirement funds
- Your business venture may lead to a large increase in income
- You may be receiving an inheritance
- You have children or grandchildren from a previous marriage
- There is a significant imbalance of wealth between you and your spouse
- One spouse will be putting the other through college
- You have elderly parents who require care
- You have or are pursing a medical degree or similarly lucrative license
How to proceed if you want a prenuptial agreement
Dunnan recommends you approach the topic with your mate as early as possible, and Palm Beach County, Fla., lawyer Michael McDonough says honest discussion is important. So long as both parties have an attorney – ideally matrimonial lawyers familiar with prenups and the laws of the state in which you’ll live together – a fair agreement is possible.