Prenuptial agreements are pretty standard when the rich and famous get married. Considering the amount of wealth these high-profile couples have, it makes perfect sense why prenups are as common as their giant engagement rings.
But what about us common folk?
Are prenups a good idea for people without millions of dollars to protect?Depending on your finances and relationship, a prenup might be a good idea for you and your sweetheart. Here are six reasons why people without multimillion-dollar net worths might choose to sign a prenup before saying “I do.”
1. If either of you have children from a previous relationship
As of 2013, 40 percent of new marriages include at least one spouse who has previously been married. Couples who have been down the aisle before are more likely to bring children into their new marriage, which adds a level of financial complication to their union. These parents often want to make sure children from their previous relationships will be financially taken care of in case of either death or divorce.
A prenup can help parents protect assets for their children, especially in terms of estate planning. For instance, state laws generally consider marital property to belong solely to a surviving spouse after one partner dies. A prenup could ensure that a portion of that property, or assets that the parent brought into the marriage, would go to the child of a previous marriage or relationship rather than the surviving spouse.
While wills can cover this same ground, having just a will that leaves your spouse less than an elective share of your estate (between one-third and one half) does not necessarily preserve assets for your children, since your spouse can make a claim against your estate for the elective share. Having a prenup that spells out what assets go to children of a previous relationship, along with a will that cements the terms of the prenup, will be a much more solid method of protecting your children.
2. If either of you has a great deal of debt
We tend to think of prenups as being a way of protecting our wealth, but they can also protect you from your partner’s debts (or vice versa). If you are entering into a marriage with a great deal of individual debt, a prenup can delineate who has responsibility for the debt…
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