When Mel Gibson divorced in 2006, it reportedly cost him a walloping $425 million because he didn’t have a prenuptial agreement. You may know of someone who suffered a similar fate — although he or she may have parted with a lot less money – but maybe that person had more income or held more assets than you. Creating and signing a prenup may seem like an unnecessary task, particularly when you’re in the middle of making wedding plans, if you don’t feel that you have a lot to protect. In fact, there are more reasons to sign a prenuptial agreement than there are not to.
Let’s begin with property and debts. Regardless of how much or how little you earn or owe, courts take the position that anything acquired during marriage is marital property. If you divorce, each of you are entitled to roughly half his property, and you may find that you’re assigned responsibility for half the debts as well. But what if your spouse doesn’t work and you purchased all those assets? What if she has a bit of a spending problem and she ran up a lot of that debt on purchases you got no enjoyment from or use of? You can establish your own rules for how you’ll deal with situations like these in a prenuptial agreement. You don’t have to trust your financial life to a judge who doesn’t know you and who just wants to rule on your situation in a way that conforms to state law. A prenup allows you to set your own terms. In most cases, prenuptial agreements trump state law. Provided that the court upholds and honors your agreement, your property is dealt according to the terms contained in the agreement, even if the law provides otherwise. Continue reading