Premarital Agreements: Insuring Your Future
People often equate premarital agreements with planning for divorce. Instead, you should think of a premarital agreement as an insurance policy on your marriage.

August 11, 2009 /24-7PressRelease/ -- Premarital Agreements: Insuring Your Future

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People often equate premarital agreements with planning for divorce. Instead, you should think of a premarital agreement as an insurance policy on your marriage. While everyone hopes for a long and successful marriage, if something happens a premarital agreement gives you a measure of protection.

Like any insurance policy, a premarital agreement is simply a contract -- in this case, between you and your soon-to-be husband or wife. While premarital agreements generally are used to determine who gets which property upon divorce, they also can be used to set out what happens to your property if you or your spouse dies, including how death benefits from a life insurance policy should be distributed.

Premarital Agreements Not Just for the Wealthy

Many believe they do not need a premarital agreement if they are not wealthy. Premarital agreements, however, are not just for the rich; they can be a sound protection policy for those who:
-Have children from a previous marriage
-Own a home or other property
-Own a share or other interest in a business
-Anticipate receiving an inheritance
-Have significant retirement savings
-Anticipate a future increase in salary
-Plan on receiving an advanced degree

Protect Your Children's Inheritance

Premarital agreements are a great way to protect children from a previous relationship or marriage. If you die without a will, the state will determine how your property is divided up under the state's intestacy laws. Generally, these laws will leave the majority of your property to your spouse and any children you have with your spouse. This could leave children from another relationship receiving far less than you intended for them to have. It also could leave adult children from a previous marriage with nothing. You can prevent this from occurring by including a clause in your premarital agreement that prevents these children from losing their inheritance should you die.

You Decide What is Best for You

One of the biggest advantages of a premarital agreement is that you -- and not a court -- get to determine how your property will be divided. California is a community property state. This means that if you and your spouse were to get a divorce, the court will divide all of the property accumulated during the marriage equally between the two of you.

Some may be comfortable with the state's laws and like the idea of an equal distribution. Others, however, may want the freedom to decide for themselves the best way to divvy up their assets. For example, you and your future spouse may decide it is fair for each of you to keep some types of property separate, like an interest in a family-owned business or a future inheritance. Or you may decide another distribution plan is more appropriate. But the important thing is that the decision is yours to make and not left in the hands of a judge who knows little about you or your family.

Limit Liability for Your Future Spouse's Debts

A premarital agreement also will allow you to determine how to divide up any debts you and your future spouse may owe -- particularly any separate debts you may bring into the marriage. This can help protect jointly-owned assets from creditors in the future, should your spouse fail to pay a debt.

For example, your spouse may have student loans from an education he received prior to your marriage. If he later defaults on those loans, you can use your premarital agreement to prevent student loan lenders from trying to go after your marital property to repay the debt.

Create a Financial Roadmap for the Marriage and After

Almost any financial topic can be included in a premarital agreement, including who will be responsible for which household bills, how much will go into savings accounts during the marriage, whether there will be joint bank accounts and how large purchases will be made.

Some topics, however, are not appropriate. While premarital agreements can be used to limit or even eliminate alimony payments altogether, they cannot be used to waive a spouse's right to child support. Parents are required by law to meet, at a minimum, the child support obligations set out by California law.

Premarital agreements also should not be used by one person to make frivolous demands on the other, like how much weight they are permitted to gain or how many times each week they must be intimate. Premarital agreements are usually upheld up the court, but if the judge believes the agreement is unfair, frivolous or an attempt by one spouse to take advantage of the other, the agreement can be thrown out.

Pre-Partnership Agreements

There also are premarital agreements for those who want to register as domestic partners. Same-sex couples can file pre-partnership agreements that will provide them the same protections as premarital agreements in the event of separation or the death of one of the partners.

Conclusion

Preparing for a wedding is an exciting period in anyone's life. For many, the last thing they want to consider is what will happen if they are one of the unlucky ones for whom marriage ends in divorce. Rather than thinking of premarital agreements as a bet against your marriage, think of them as a rainy day insurance policy: you may never need it, but if you do, you will be glad that you have one.

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