|Everything you need to know about
Nothing can kill romance faster than the word prenup.
But with about one in three of all first marriages ending in divorce,
and 50 percent of second or third ones hitting the skids, a prenup
is smart financial planning, legal and financial experts say.
"Think of it as a business arrangement or as an insurance policy
to help remove some of the emotion that's naturally involved,"
says Nancy Dunnan, a New York City financial adviser and author.
"Marriage is not just an emotional and physical union -- it's
also a financial union. A prenup and the discussions that go with
it can help ensure the financial well-being of the marriage."
A prenuptial accord is a contract between two people
about to wed that spells out how assets will be distributed in the
event of divorce or death. Such agreements have existed for thousands
of years in some form or another, particularly in European and Far
Eastern cultures, where royal families have always made provisions
for protecting their wealth.
|It's an enchanted evening, and
your dreamboat has just popped The Question: "Honey,
will you sign a prenuptial agreement?"
|Nothing can kill romance faster than the word "prenup."
Check out this guide to the often-misunderstood agreement
that is becoming more and more common.
Not just for the rich
You don't have to be a Rockefeller or Trump to need a premarital
agreement. A person who has managed to save $30,000 may be more
protective of their little nest egg than someone who has millions.
"Those are sometimes the most jealously guarded
assets because it has taken a lot of hard work to accumulate a small
amount," says Joseph P. Zwack, an Iowa lawyer and author of
a best-selling handbook "Premarital Agreements: When, Why and
How to Write Them."
You should consider having a prenup if you fall into
any of the following categories:
||You have assets such as a home,
stock or retirement funds
||Own all or part of a business
||You may be receiving an inheritance
||You have children and/or grandchildren
from a previous marriage
||One of you is much wealthier than
||One of you will be supporting the
other through college
||You have loved ones who need to
be taken care of, such as elderly parents
||You have or are pursuing a degree
or license in a potentially lucrative profession such as medicine
||You could see a big increase in
income because your business is taking off, or that garage band
you play in has just gotten a contract with a big record company.
So how does one broach this touchy subject? First, do it as early
as possible. The mention of a prenup shouldn't come as a surprise
if you and your sweetheart have been open with each other as the
relationship became serious.
Dunnan recommends couples talk it over before the
engagement. "Let your intended know you believe these agreements
are important and that you'd like to go over the topic."
Second, the discussion must be honest. "You have
to be real candid about why you want the agreement. It's not very
romantic, but you have to appreciate what the other party's concerns
are," says Michael McDonough, a Palm Beach County, Fla., lawyer
who practices matrimonial and family law.