Friday, October 30, 2009

Prenuptial Agreements - Estate Planning Idea

Social Jury points out a prenuptial's use in estate planning in Prenuptial Agreements to Protect the Family

With approximately 1/3 of first time marriages ending in divorce, and 50% of subsequent marriages ending in the same fashion, it is becoming increasingly common for one or both parties to already children from a previous marriage. Therefore, a prenuptial agreement is an important way to protect the children who will inevitably become involved in the marriage.

One issue that should be addressed in a prenuptial agreement is: who will inherit the couple’s money if both should die? Another important concern to consider and address in a prenuptial agreement is: how will the biological children of one party be affected if that person should die? In other words, if Bill has two kids and he marries Lorie, what will happen to Bill’s kids if he should die? Will Lorie continue to provide for them? Or, will they be left to fend for themselves? Of course, no parent wants the latter for his children.

A step-parent has no legal obligation to care for children after the death of the spouse. Therefore, a prenuptial agreement can ensure that the children of the biological parent are still cared for after the parent’s death. Issues such as inheritance and life insurance, and who the beneficiaries are of both, should be included within the prenuptial agreement. Therefore, a person with children who is getting married should consider a prenuptial agreement in order to secure a strong future for the children.

Children are not the only people who can be affected by a divorce. Other family members and business partners can be, as well. If Beth owns a family business, which has been passed down for generations in her family, she can protect the family business with a prenuptial agreement. Since a prenuptial agreement has to be fair to all parties, Beth will most likely need to “give” something in return in the prenuptial agreement. The peace of mind knowing that the family business will remain in tact, and stay within the family, is well worth the trade off.

In a similar fashion, business partners can be protected with a prenuptial agreement. If Tom and Scott have worked over the past five years to create a successful business, and Tom is about to get married, the business and its assets can be protected by the prenuptial agreement. This not only protects Tom, but it protects Scott, as well. Without a prenuptial agreement, Tom and Scott’s business could potentially be torn apart by a divorce.

A prenuptial agreement can also help protect the parents of one of the partners who are about to get married. For example, if Cindy has parents who are ill and need to be cared for, Cindy could have it included in her prenuptial agreement that her parents can live with the married couple to be cared for. Similarly, she could have it included in the prenuptial agreement that the couple agrees to pay for care for Cindy’s parents in a residential nursing facility.

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