A pre-marital agreement is a legally binding agreement made by two people before they become married. These agreements are generally financial in nature and deal with issues such as the division of assets in the event of a divorce or death. A pre-marital agreement is also known as a pre-nuptial agreement. There are many potential benefits of a pre-marital agreement.
1- Verify Motive
When a rich person gets married, he or she may naturally worry about the true motives of the other person. Motives can be particularly suspect when there is a significant difference in the net worth of the two people who are getting married. The willingness of a person to complete a pre-martial agreement can be seen as a sign of good intentions that the person is getting married for love and not for money. Though a pre-marital agreement may not be seen as romantic, it is a tool that be used to make certain that a person is genuinely interested in marrying for the right reasons.
2- Document Agreements
In many marriages, there are oral agreements about how things are to done in the event of a death or divorce. However, these oral agreements are rarely enforceable and generally result in feuding families that may never be reconciled. A pre-marital agreement can assign assets, debts and settle other potential matters of conflict. When the agreement is legally made and recorded, the agreement will be followed in the event of death or divorce.
3- Assist With Estate Planning
Estate planning is a serious financial issue that too many people neglect. However, those with large financial holdings should have a thorough estate plan that takes into consideration the wishes of the property owner and the financial consequences of a decision. For example, a parent may want to leave a particular asset to a particular child. In order for a specific person to receive the property, the wishes of the parent must be listed in a will, trust or other estate planning document. However, the laws of property disbursement for a married person may not allow the transfer of the asset, regardless of the will. A pre-marital agreement can help to avoid these problems by getting the legal documents in place to support the estate plan.
4- Remove Disagreements
Disagreements concerning money is the most common reason for divorce in the United States. A pre-marital agreement can help a newly married couple to start their new life with a little less stress. The first years of marriage should be spent making memories, bonding and planning for the future. A pre-marital agreement will allow the new couple to focus on each other and not worry about dealing with real estate holdings, businesses and other large financial concerns.
5- Calm Family Fears
When people get married there is often a lot of concern from family members. This is especially true when wealthy people and those with adult children get married as family members often worry about what will happen to heirlooms and other property with both financial and emotional value. A pre-marital agreement that sets out how family assets and property will be divided can help to put family members at ease. As family members will not have to worry about the new spouse ending up with family homes and other property, the families may forge a strong relationship around the married couple.
6- Reduce Divorce Time
Though no one wants to plan for a divorce, the simple fact is that about 50% of marriages will end in divorce. In addition to the end of the marriage, a divorce is also an expensive endeavor. For wealthy people, divorces can take years and result in tens of thousands of dollars in legal fees. A simple pre-marital agreement can save a lot of the time, stress and expense by setting out the terms of dividing property and debt in the event that a marriage ends.