A common misconception is that only wealthy couples need a prenuptial agreement. A young woman who anticipates inheriting a massive sum of money will benefit from a prenup just as equally as an eager entrepreneur with only a hundred dollars and loads of debt to his name.
Without a contract outlining what happens to each of these individual’s assets, circumstances could go south pretty quickly upon a divorce. Rather than permit courts to decide, a prenup allows each spouse to agree upon what happens to their assets if a divorce were to send them separate ways.
Consider that couples enter into prenup agreements more commonly today than a mere decade ago. Potential spouses of all income brackets safeguard their property in the event of a divorce. In Illinois, prenups must be written and signed by both parties to be validated by the legal system.
A prenuptial agreement is entered prior to marriage. Both potential spouses decide how to handle their debt, assets and any other financial issues should their union legally dissolve. Once the couple formally marries, the prenuptial agreement automatically goes into effect.
Examples of what a prenup covers may include whether or not one spouse pays alimony to the other after a divorce as well as the payment amounts and duration. Ownership of property after divorce is addressed. Prenups also cover any matters that are legally contracted by individuals.
How is a business protected in a prenup?
The transfer, sale, use of and overall management of property is covered in prenuptial agreements. The fledgling entrepreneur mentioned earlier may find his business booming during mid-marriage. Without a prenup in place, a court will determine how his business and assets are divided upon a divorce.
During a divorce, the matrimonial judge may award the entrepreneur’s spouse significant assets from the profitable business. If the divorcing spouses cannot agree on the value of the business, they will each hire valuation experts. In court, the battle will ensue, leading to stress and mounting legal fees.
A prenup is a cautionary step intended to protect one’s business assets in the unanticipated event of divorce. The smalltime entrepreneur who entered the marriage with insurmountable financial debt is unlikely to know if his business will succeed. Whether it does or not, a prenup guarantees protection.
Entering into a prenuptial agreement is a sensible choice if the entrepreneur aims to retain what is rightfully his upon dissolution of the marriage. An unpredictable scenario like this proves that the wealthy are not the only ones who benefit from entering into a prenuptial agreement.
How are debt obligations handled in a prenup?
Premarital debt is often considered separate debt. However, as the marriage enters into its fifth or tenth year, debt can eventually become consolidated; or refinancing can blur the lines of responsibility. Upon a divorce, a prenup identifies which spouse is singularly obligated to repay the debt.
Intermingling debt, like housing debt, into student loan debt during a marriage can make both spouses responsible for repayment. Prior to entering a legal union, debt-free individuals who clearly outline via a prenup who is obligated to certain debts preserve their financial integrity.
Accumulating unforeseeable debt is not only reserved for the wealthy. Couples without high financial stakes also accrue debt, making a prenuptial agreement especially important if a divorce were to occur. Potential spouses with an ability to take out a loan should strongly consider a prenup.
How are inheritances protected in a prenup?
A major inheritance can be a financial game changer. Protecting those assets with a prenup is a smart move. While inherited assets are not typically considered marital assets (unless bestowed to both spouses), they can become commingled during the course of a marriage, just like debt.
An individual who inherits a substantial monetary sum might purchase a home. If both spouses reside in the home, the property may be considered a marital asset. Without a prenup, the marital assets can be divided in a divorce. But a prenup protects the inheritance from a divorcing spouse.
The benefit of a prenup is that the agreement may be drafted to clearly explain ownership of assets, whether they be an inheritance, trust fund or other family money. A correctly drawn-up prenup will keep the inheritance separate from marital property.
Is the prenup binding?
A prenuptial agreement is not set in stone. Spouses may amend their prenup any time after marriage. Similar to entering the prenup, amendments must be presented in writing and signed by both parties. Married couples may also revoke the prenup by submitting the cancellation in writing.
Under Illinois divorce law, most prenups are enforced by the courts. Circumstances where the judge will not enforce the prenup include when one spouse was under duress and failed to sign the agreement voluntarily or the terms of the prenup are unconscionable (severely unfair or unjust).
While a prenuptial agreement is a highly unromanticized contract between potential spouses, having one in place secures your financial future upon divorce. Having a prenup correctly drawn up may be achieved by consulting the legal counsel at Allen Gabe Law, PC.
Our firm of family law and divorce attorneys have sixty years of legal experience. We are highly knowledgeable in Illinois divorce law and stay current on changing policies. Lawyers at Allen Gabe Law dedicate attention to each one of our clients to ensure they receive expert legal guidance.
When a prenuptial agreement makes sense to you or you are considering an amendment, consult Allen Gabe Law, PC. Our skilled family and divorce lawyers will draw up or revise a contract to meet your needs and fully protect your financial assets in the event of divorce.
The family law attorneys of Allen Gabe Law specialize in all facets of divorce law. We offer reliable legal services to individuals and families in Schaumburg, Illinois, and its surrounding communities. Countless satisfied clients have trusted our qualified attorneys to draw up prenuptial and postnuptial agreements.