Some people may find these two words, prenuptial agreement, offensive as they might think they suggest a lack of trust between partners.
However, in our modern world they have a number of benefits, particularly in the case of blended families.
Following are some cases in which a prenuptial agreement might be appropriate.
Prenuptial Agreement Case 1
Consider the case where a couple marries later in life after accumulating their own separate wealth and where they each have adult children.
If they combine all of their assets and do not turn their mind to how their property would be dealt with if they separated or one of them died, then a very unfair set of circumstances can result.
If, for example, after combining their assets, one of them dies, then the survivor can change their Will and leave all of the combined assets to their own children and leave the children of the deceased partner with nothing.
The current state of the law means that the children of the deceased partner do not even have the right to make a claim against their step-parent’s estate when that step-parent passes away later on.
All this could be avoided if the couple had properly documented how their assets and liabilities were to be dealt with in the event of their separation or death.
Prenuptial Agreement Case 2
Consider the case where it is expected that one of the parties will receive a substantial inheritance during the relationship from a wealthy parent.
Prenuptial Agreement Case 3
Where the parties marry or commence a de facto relationship when they are in their 30’s or beyond and have had the opportunity to become financially involved in a family business such as a farm, then a pre-nuptial agreement can protect the family assets from attack in the event that the relationship or marriage later breaks down.
The advantages of a prenuptial agreement
As ugly as the phrase might sound, the advantages of prenuptial agreements cannot be denied. They include:
- Knowing up front how property will be distributed between the parties in the event of separation and avoiding the emotional and financial cost of going to court
- Financially protecting your children from a previous relationship
- Opening up the discussion about financial matters early which generally facilitates more fluid discussion about these issues during the relationship
- Financially protecting a family business
- Quarantining a future expected benefit
Consider a prenuptial agreement as an insurance policy.
Most of the time we end up having had insurance for years for nothing, but it gives us peace of mind knowing that it is there if we need it.
Contact us today if you are considering this insurance policy for yourself and we can help guide you through raising the topic with your future or current spouse in a tactful and constructive manner.