With over half of all marriages ending in divorce, many people are choosing to use a prenuptial agreement to protect their income and assets. While such an agreement can be very powerful, it does have its limitations.

Remember those marriage laws are primarily at the state level. The limitations of a prenuptial agreement will be different from state to state.

Most people think these agreements only apply to those of considerable wealth. But consider that in any divorce, there is usually one party that feels good about the outcome and one that does not. Consider which side you’re likely to find yourself on. Anyone getting married would be wise to at least give it some thought.

The power (and limits) of a prenuptial agreement:

1. It’s not iron clad. A judge has the option of determining whether each clause is reasonable. He can throw out any portion of the agreement that he deems unfair or invalid. A good attorney can reduce the likelihood of this happening.
    
2. Protect your financial health. Many states default on an agreement where both spouses share all property, debt, and assets equally. Just because your name is the only name on the deed to your house doesn’t mean your spouse doesn’t get half. You can also be on the hook for half of your spouse’s credit card debts and car loan.

• • A prenuptial agreement can outline the division of assets and debt in the case of divorce.
     
  • It can also protect your retirement benefits, stock options, and retirement accounts.

3. In most cases, a prenup cannot determine child support. The courts typically do what is best for the children, regardless of what you and your spouse decided in your prenuptial agreement.

4. Spousal support might be controlled. Many states permit spousal support to be determined with a prenup. However, the numbers must be reasonable and fair in most states. Some states leave spousal support up to the court system, and the prenup numbers are ignored.
    
5. Minimize conflict and drama and save money. There’s less arguing when both parties agreed to the terms and signed on the dotted line.

• In theory, with less to argue about, the attorney fees should be significantly less.
   

6. It can be part of an estate plan. While a will is invaluable at the time of death, a prenuptial agreement can also be important if you want part or all of your estate to go to someone else, like your children.

• This issue is especially important if you have children from a previous relationship.
   

7. Non-financial issues can be included. It varies with the state, but many allow clauses related to who does the grocery shopping and how much each spouse will weigh. Nearly anything can be included.

• Beware. Too many personal clauses can cause the judge to see the overall agreement as frivolous. Let your attorney be your guide.

8. It can be useful if you own a business. Whether you own a business by yourself or jointly, an agreement can be helpful. One spouse might be forced to sell his half to the other. You might want to keep your solo business all to yourself.

• If you have partners, it’s especially important to have an agreement.

Prenuptial agreements are less than romantic and can even be viewed as an implication that you expect the marriage to fail. But with the prevalence of divorce, such an agreement can be a valuable financial tool.

Even if you don’t have significant financial assets, it’s worth consideration. Get the best attorney you can afford to ensure the agreement is done effectively and appropriately for your circumstances and desires.

The information, views, and opinions provided or expressed by authors or publishers on WealthCare Blogs are for general education and entertainment purposes only. No advice or recommendations are provided. You should consult with an appropriately licensed wealthcare professional or do your own due diligence before making any wealthcare decisions.