Reality television star Kim Kardashian protected her sizable assets (estimated at $35 million) with a prenuptial agreement, so when her 72-day marriage broke up with NBA player Kris Humphries, she at least knew she wouldn’t lose her wealth in the split. The Los Angeles Lakers’ Kobe Bryant, however, had no such agreement with his wife Vanessa, who is now poised to claim half of Bryant’s $150 million fortune when their divorce becomes final.
While it may be tempting to believe that prenuptial agreements are only for the rich and famous, that couldn’t be farther from the truth. A prenuptial agreement is a contract between two people signed before marriage that details what will happen in the event of divorce, particularly regarding financial affairs—and it can indeed be beneficial for every day people who want to make sure their assets and income are protected in the case of a failed marriage.
Increasingly, Americans are seeing the value in a prenup. A 2010 Harris Interactive poll found that nearly one-third of single adults would ask their future spouse to sign a prenuptial agreement. Of the divorced included in the survey, 15% regretted not having had a prenup—and 40% of them would ask their future spouse to sign one should they get married again.
What follows are some reasons why even those of us who aren’t followed by paparazzi might consider signing a prenup, besides the obvious motivations of protecting your current assets, income, and business interests.
1. Avoid public, in-court battles. One of the biggest benefits of having a prenup is having the opportunity to settle disputes out of court within the wording of the agreement. This can save time and money and keep details about a divorce more private than if they were aired in open court. Moreover, if children are involved, a prenup can limit the wrangling over finances that often occurs in divorce situations and the emotional cost associated with it.
2. Provide for split of assets acquired during marriage. A prenuptial agreement allows you to determine in advance how the assets acquired during the course of your marriage would be divided upon divorce. This agreement can be especially beneficial in community property states such as California, which entitles each spouse to one-half of all assets or income acquired during marriage.
3. Shield You From Spouse’s Debt. A prenuptial agreement can separate out existing debt so that one spouse would not be responsible for current debt in the event of divorce, and can also offer protection from the debt that the other spouse runs up during the marriage.
4. Protect Assets for Children From a Previous Marriage. For second or subsequent marriages, especially if there are children from a previous marriage, a prenuptial agreement can protect assets that should eventually go to those children.
5. Protect family heirlooms. If one spouse has particular assets that have sentimental value, even if they don’t carry very much monetary value, a prenup can spell out who gets these assets in the event of divorce.
6. Protect an inheritance. If one spouse (or both) expects an inheritance during a marriage, a prenuptial agreement can include provisions that state the inherited assets will remain the property of the inheriting spouse—so long as the inheritance is kept separate from community property.
7. Provide for pet ownership and care. Many people feel that pets are members of the family, and unfortunately, in divorce situations, there can be battles over dogs, cats and other furry or feathered friends. A prenuptial agreement can decide beforehand who will get primary ownership of a pet, who will be responsible for care and maintenance, and more.
8. Spell out alimony and spousal support obligations. A prenuptial agreement can lay out the plan for alimony and support obligations in the event of divorce. Note, however, that child support payments can never be agreed to beforehand in a prenuptial agreement.
9. Require or incentivize certain behavior. A prenuptial agreement can also go beyond the purely financial and go into more detail as to how one spouse expects the other will act—and may even offer “rewards” to one spouse for certain behavior. For example, a provision in the agreement could be tied to a spouse’s abstinence from drugs or alcohol. Some prenuptial agreements also include provisions regarding infidelity, stating if one spouse or both is unfaithful, the agreement is void or the cuckolded spouse is entitled to a certain amount of money. Note, however, that non-financial provisions may not always be enforceable in court.
Final word on prenups
Every state allows prenuptial agreements, but state laws regarding them vary greatly. Accordingly, if you’re interested in prenuptial agreement, you should be sure to know the laws of your state to be sure your prenup will hold up if and/or when it is necessary.