Saving Money / Relationships
PeopleImages / Getty Images
Whenever a high-profile couple’s impending divorce makes headlines, there’s often discussion of a prenup. A prenup, short for pre-nuptial agreement, is a legal document that describes what will happen to finances and assets during the marriage, and how the couple’s assets will be divided in the event of a divorce. It’s created before the wedding, which can make it a bit of an emotional tinderbox. Before you tie the knot, here what you need to know about a prenup.
Prenups Aren’t Just for the Uber-Rich
While the divorces of billionaire couples like Bill and Melinda Gates and Jeff and MacKenzie Bezos are the ones that get people talking about prenups, they’re not just for the super-rich. There are a number of circumstances that could make getting a prenup a smart decision. Here are just a few.
When You Should Get a Prenup
- Prior marriage. If you’ve been married before, and particularly if you have children from your previous marriage, a prenup may make sense. You may want to specify what will happen to the assets that you bring to the marriage, especially as they may impact your children.
- Higher or lower net worth. If you have a significantly higher – or lower – net worth than your intended, a prenup can help ensure that, should the marriage go south, you won’t lose half of what you came into the marriage with.
- Business owner. If you own a business or have a stake in a business, you may have more equity than cash, and therefore think you don’t need a prenup. Think again – if you get divorced and have to split the business equally, you may find yourself not only working alongside your ex-spouse but having to agree on business decisions 50/50.
- Stay-at-home spouse. When a couple decides that one spouse will stay home with the children while the other provides for the family financially, a prenup may be in order. Otherwise, the stay-at-home spouse may find themselves with few resources and no ability to earn a living in the event of a divorce.
What Does a Prenup Cover?
A prenup outlines what will happen in the event of a divorce. While it’s often associated with the division of a couple’s existing financial assets, it can also cover things like child visitation and support, spousal support, future inheritances and more.
It can also cover what will happen if the marriage ends for a particular reason or at …….