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3 Reasons to Have a Prenuptial Agreement

Before you and your significant other marry, the two of you should have some serious discussions about your financial future. 

We often advise couples to consider a prenuptial agreement, particularly if either of them has children from another relationship, is expecting an inheritance, or owns a business.

1. Blended Families

Children from previous relationships stand to lose out financially if a parent and stepparent divorce. If you are starting over financially, so are your children. You can use a prenuptial agreement to protect your children’s future, not only in the case of divorce but also after your death.

2. Inheritances

California is a community property state, meaning that what one spouse acquires during the marriage belongs to both. However, this does not extend to inheritances. If you receive an inheritance, it is your own separate property as long as you keep it separate. In your prenuptial agreement, you can make it clear that your inheritance is not up for division in the event of a divorce. 

As long as you provide full disclosure and your future spouse does not feel coerced or tricked into signing, then a judge will likely honor the agreement.

3. Businesses

In the article, “What You Need To Know About Prenups,” Forbes discusses how this type of agreement can help protect a business. You should include the following facts about the business: 

  • Its value at the date of the marriage 
  • Each spouse’s interest in the company’s profits and losses 
  • How much of the business each spouse has a right to 
  • The method of valuation in the event of a divorce