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Five Reasons for Prenuptial Agreements in Modern Times
by Dan A. Baron, Baron Law LLC
You’ve fallen in love with your college sweetheart and you know she is that special someone that you want to spend the rest of your life with. You and your future spouse have tens of thousands in student loan debt. You just bought a house and your new job provides a substantial salary. Your significant other also has a great career but the income level is disproportionate because they took a government position. You both want children but can’t agree on how many or when the right time might be. You’re ready to ask their hand in marriage but you’re concerned, like most people, that what you’ve spent a lifetime building in assets might be subject to a split in the event of divorce. Does this sound too cynical? No! You should be concerned and here are the top five reasons why.
1. Statistically, there’s a 50% chance of divorce.
While we all want to believe in the sacred saying, “’til death do us part,” statistics point out that more than half of all marriages end in divorce. If you have assets or your significant other has debt, you would be a fool not to consider an agreement that outlines the distribution of assets and debt in the event of divorce. You can avoid lengthy and expensive divorce proceedings by planning ahead with a prenuptial agreement. Cynical or not, if you plan to get married, you have a better than even chance that at some point your marriage will fail. Plan ahead, for both you and your future spouse.
2. You earn less income than your future spouse.
If your spouse-to-be is the primary income earner, agreeing ahead of time on the amount and duration of spousal support may help secure your financial future. This is often argued through divorce because a person’s lifestyle is considered when calculating spousal support. For those considering having children, agreeing up-front the value, in monetary dollars, of staying home and taking care of kids is critical. For example, assume husband and wife gross $150,000 a year and then wife, who makes $90,000 a year, decides to be a stay-at-home mom to raise their newborn son. Wife stays home for 6 years before deciding to go back to work. Three years later the couple gets divorced after the death of husband’s father which took a toll on his emotional wellbeing and marriage. What is the value of the six years that wife stayed at home with the kids? Is it $90,000 x 6 years? These are questions that are argued in divorce court for years and end up costing the unprepared fiancé tens of thousands in legal fees.
3. Owning a business.
If you are a business owner, your spouse can claim a portion of your business appreciation or the income derived from your business. For example, assume your business earns $500,000 in gross sales today, then you get married and your business grows to $2 million in gross sales. If you get divorced, not only is your spouse entitled to half of the growth over the last seven years but also a portion of the potential growth in years to come. That’s right! Your spouse would be entitled to projected sales even before they happened. Business owners should ALWAYS get a prenuptial agreement to themselves, their business and their employees.
4. Avoiding extensive court proceedings.
Divorce can be a lengthy and expensive process where emotions run high. Although a prenuptial agreement may not safeguard your emotions, it will offer a level of protection against the financial damage that a divorce can sometimes cause. Divorces range in cost but unquestionably they will be charged from attorneys at an hourly rate. This is because it’s impossible to determine the length of time it takes to argue a divorce. According to a national study, the average time to get divorced is 18 months. Multiply that times the number of hours your attorney spends on the case and it can be quite costly.
5. Determining separate and premarital assets.
When you get divorced, the court presumes all property is marital. A spouse claiming property as separate has the burden to prove its separate nature. This can be a huge hassle.
As a general rule of thumb, banks are only required to keep records for five years and 401k plan records must only be kept for six years. This causes a tracing nightmare, making it difficult to establish your premarital assets when you yourself have not maintained adequate records.
When you enter into a prenuptial agreement, however, you and your spouse-to-be will provide and acknowledge a full accounting of all assets and liabilities that exist immediately prior to your marriage. The hassle is then avoided.
Bonus reason – the dog.
For many, pets are family. While viewed as family by many, however, pets are viewed as personal property in the eyes of the law. This means that a pet equates to ownership of a television. By including your pet in your prenuptial agreement, you are able to avoid contentious litigation over who keeps the dog.
For more information or to speak with an attorney at Baron Law, contact us at dan@baronlawcleveland.com or 216-573-3723.
Sponsored By
Baron Law LLC
Crowne Centre, Suite #600
5005 Rockside Road
Independence, Ohio 44131
216-573-3723
www.baronlawcleveland.com
Opinions and claims expressed above are those of the author and do not necessarily reflect those of ScripType Publishing.