Do I Need a Prenup?
Forbes’ recent article entitled “Prenuptial Agreement: What Is A Prenup & How Do I Get One?” explains that a prenup contemplates the end of the marriage, so the couple can divide assets with an objective mindset. A pre-nup can even help protect a business.
Prenups allow you to determine if alimony will be due if the marriage ends, as well as the amount and terms of those payments. A pre-nup can also say what kind of bequests you leave to each other in your will. It can also be good for couples trying to keep separate significant pieces of personal property, including future inheritances and other anticipated income. This is common for couples with a significant age or wealth difference and among older or remarrying couples.
Prenups Aren’t Just for the Very Wealthy. Prenups can be a useful tool for almost everyone.
Protect Family Heirlooms. If you have a family heirloom and want to make sure that if your marriage ends, you’ll get to keep it, you can draft a prenuptial agreement that states the family heirloom is yours.
Pass Property to Children from Prior Marriages. A prenup can be used to establish property rights for second marriages. If you have children from a previous marriage, you can protect their interests in your assets and property.
Clarify Financial Rights. Prenups can help you decide now how assets will be split up instead of waiting until divorce proceedings. While divorce may never come, determining the financial distribution now saves time and headache.
Debt Protection. Prenups also provide debt protection. Some people enter a marriage with substantial financial debts, tax debts, or student loan debt. For couples in this situation, they can sign a prenup and clarify that those debts remain the separate responsibility of the spouse who incurred them, and thereby protect the income and assets of the other spouse. They can also decide how debts incurred during the marriage will be handled.
Avoid Emotional Arguments. Divorce is emotional. It can be an overwhelming and upsetting process. When you’re negotiating with your spouse about assets, tempers can cloud your judgment about asset distribution. Contemplating these items with a clearer head is better for all.
In answering the question, “Do I need a Prenup?”, under Louisiana law, if you want a pre-nup after getting married (effectively a “post-nup”), you and your spouse have to petition the court in your parish of residence to have the community property regime dissolved judicially. This can be an expensive process, and may not be used to avoid the unwanted debts that may have been already incurred.
Also, when answering the question, “Do I Need a Prenup?”, keep in mind that if you don’t have one, and one spouse has substantial “separate property”, the income produced by that separate property is community property. This classification of the income from separate property as community property can include rents, interest, or other earnings from your separate property. This can result in coomingling of your separate property with community property income over time. In the event of a divorce, this can present a problem. If you want to make sure that the income produced by your separate property remains separate, and you don’t have a pre-nup, you have to deliver to your spouse something called a “declaration of paraphernality”, and for it to be effective, you have to be able to prove that it was sent and delivered to your spouse. Best to do this via certified mail.
BOOK A CALL with me, Ted Vicknair, Louisiana Board Certified Estate Planning and Administration Specialist, Louisiana Board Certified Tax Law Specialist, and Louisiana CPA to learn more about estate planning in Louisiana, incapacity planning, and Louisiana asset protection.
If you liked this article, “Do I Need a Prenup?” read also these additional articles: Can a 529 Plan Help with Estate Planning? and Can You Prevent Family Fights over Inheritance? and Top Five Estate Planning Mistakes and What Do You Need to Do When a Spouse Dies?
Reference: Forbes (Oct. 24, 2022) “Prenuptial Agreement: What Is A Prenup & How Do I Get One?”