Getting Married for the First Time in Your 40s: Why You Need a Prenuptial Agreement

If you’re marrying for the first time in your 40s, entering a prenuptial agreement becomes especially important. You’re most likely entering the marriage with more significant responsibilities than your 20-something counterparts: an established career, property, kids, substantial assets and debt, or maybe even your own business. You’re also probably bringing fixed financial habits and ideas about how to manage your money into the marriage–a fact that could cause some tension down the road.

A prenup can help you ward off potential financial problems, both during your marriage and in the event that it ends. When well-drafted, it can protect your assets, ensure that neither spouse becomes responsible for the other’s debt, and even dictate financial expectations and practices during the marriage. Here’s how.

Asset Protection

As you may know, a prenup is a legal agreement in which an engaged couple establishes which assets should be kept separate and which should be considered marital property in the event of divorce.

If you divorce without a prenup, you must divide your property and assets with your spouse according to your state’s laws. It won’t matter if you believe certain assets or properties to be your own–if the law demands an equal split, then your spouse will be entitled to their share.

A prenup allows a couple to determine precisely how the assets should be divided if there’s a divorce. For example, you can ensure that family heirlooms remain the property of the person bringing them to the marriage, or preserve as separate certain assets intended for children outside the marriage or the care of aging parents.

For business owners, a prenup is a must. Without an agreement, your spouse could end up entitled to half the value of your business in the event of a divorce, even if they had nothing to do with its creation, management, or growth. This outcome could disrupt business operations or run your company into the ground.

You can avoid this risk by using the prenup to designate the business as a separate asset, or otherwise define your spouse’s rights with respect to the company–both during the marriage and upon possible divorce.

Protection from Debt

Prenups can also protect each of you from financial obligations that the other person incurred before the marriage. The prenup can exclude business debt, student loans, and credit card debt, and more from the marital property. If you don’t take this step, you could find yourself jointly responsible for their repayment, even if the marriage doesn’t work out.

Marital Financial Management

A prenup can also establish how you will manage your finances in the marriage. For example, it can designate the spouse responsible for paying the bills, establish whether to file taxes jointly or separately, describe how you both agree to handle savings, investments, or even bank accounts. In this respect, a prenup doesn’t have anything to do with divorce–but establishing your respective financial roles in this manner might protect you from one!

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