Financial Impact of Prenuptial and Postnuptial Contracts

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If you are a high net worth person whose spouse is not as wealthy as you, securing your financial assets in case of a divorce is crucial. One simple and effective way to achieve this is by signing a prenuptial or postnuptial agreement with your future wife or husband.

The main goal of these documents is to clarify how the financial assets of the high net worth individual will be divided between the two spouses during a divorce.

While prenups are drafted and signed at least one month before marriage, postnups can be drafted and signed at any time throughout the marriage.

Although prenups are significantly more common, postnups have become more and more popular in recent years. They are as valid as prenups in the event of a divorce, as both documents concern mostly financial assets and protect the money of the high net worth spouse.

Contrary to popular belief, prenups and postnups are not only for high net worth people, as they can ease the burden of a divorce for any couple. Nevertheless, only 5% of couples have one of these documents upon divorce, which means that it is mostly the wealthy that draft and sign prenups and postnups.

There are numerous benefits of having a prenup or a postnup signed with your significant other, including:

  • saving time and money in the regrettable event of a divorce
  • defining what qualifies as marital property from the start
  • open and honest communication about money since the very beginning of the marriage
  • the high net worth spouse protecting their separate finances
  • protecting yourself from debt if you are a high net worth individual

How Can a Prenup or Postnup Ease the Financial Burden of a High Net Worth Divorce?

In the event of a high net worth divorce, a prenup or postnup can reduce complications regarding finances to a significant extent. The document, if it was drafted correctly and considered valid by the court, can also protect the financial assets of the high net worth spouse while at the same time ensuring that both ex-partners are financially secure.

Furthermore, a prenup or postnup can secure children's access to financial assets if one of the spouses enters a second or third marriage. Consequently, a prenup or postnup can be a very smart choice. Nevertheless, it is essential to understand that a prenup or postnup has limitations when it comes to protecting your finances.

Many people assume this document allows you to have full control over what happens to your money as a high net worth individual as a result of a divorce, but this is not always the case. While the judge will always respect the legal legitimacy of a prenup or postnup, they will also allow spouses to challenge the document's validity.

There are a few things you are not allowed by law to include in your prenup or postnup, but they rarely concern financial assets. This is because these contracts are nearly 100% about finances and how financial assets will be divided in case of a divorce.

As a result, you can agree to things such as the following, which will greatly simplify your high net worth divorce:

  • whether a spouse is entitled to payouts from life insurance policies
  • what happens to the retirement accounts
  • whether spousal support will be paid to the less wealthy partner
  • how financial assets are divided
  • how the division of life insurance will be tackled
  • what happens in the case of a spouse's death
  • whether a will is necessary to help strengthen the terms of the prenup or postnup

Lastly, to make sure your prenup or postnup is enforceable and valid in the event of a divorce, you should openly reveal to your future spouse the existence and value of all of your assets, not make them sign the document in a manner that could not be considered forcible, ensure they understand what the prenup or postnup entails and what each term means, and, perhaps the most important thing, have your prenup or postnup drafted by a specialized lawyer with plenty of experience in this area of practice. In fact, both spouses must have their own attorney upon signing the prenup or postnup for equal representation and for everything to be clear from the beginning.

Our Law Firm Specializes in High Net Worth Divorces and Will Help You Navigate Yours

For over 25 years, Sean M. Cleary, the owner of The Law Offices of Sean M. Cleary, has been handling high net worth divorce cases and is thereby prepared to offer you the assistance you need to navigate your divorce with more ease.

After carefully listening to you and thoroughly analyzing your documents, he will provide you with a foolproof strategy to speed up your high net worth divorce and to make sure the judge does not contest your prenup or postnup.

We can guarantee that you will eventually be satisfied and content with the services of The Law Offices of Sean M. Cleary.

Disclaimer: Please note that the information provided on this site is not formal legal advice, also the site does not allow you to form an attorney-client relationship.