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Reasons to consider a prenuptial agreement

On Behalf of | Apr 9, 2024 | Divorce

When a couple in California signs a prenuptial agreement, they are signing a document that details what will happen to any debt, assets, property or income if there is a divorce or separation. This agreement might also include an alimony agreement. However, questions about child custody or child support are usually not included. There are several reasons why a married couple may want to consider a prenuptial agreement.

One has a high income

In a high-asset divorce, where one party earns significantly more than their spouse, the high earner may be required to pay alimony to their estranged spouse. Factors such as the circumstances of the separation or divorce determine who pays alimony and how much. Generally, the longer a person is married and the more they earn, the higher the risk of significant alimony payments. A prenuptial agreement may protect the higher earner from paying excessive alimony in case of divorce or separation.

Children from a prior relationship

If either party has children from a previous marriage or relationship, they should consider a prenuptial agreement. While child custody and child support are usually not addressed in such a document, some clauses can protect the children. For example, if one party has property or money that would otherwise be included in the marital estate and is subject to division during a divorce, they could stipulate in the prenuptial agreement that these assets are not marital property and can be left to the children as a future inheritance.

Protecting significant assets

If either prospective spouse has substantial financial assets such as cars, boats, real estate or investment accounts, it is wise to consider a prenuptial agreement. This ensures that any income from these assets remains separate from the marital estate. Additionally, if either spouse has significant stock holdings, there may be a risk during divorce that the other party could claim all or part of the stocks and their income. A prenuptial agreement can help safeguard these investments from division or seizure in case of divorce.

While most people enter marriage with the intention of it lasting forever, statistics show that divorce is possible in any marriage. Therefore, a prenuptial agreement allows both parties to ensure that their financial interests are protected in the event the marriage dissolves.