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Prenuptial agreements provide major asset protection

Couples engaged to be married may find prenuptial agreements useful in order to avoid unnecessary future conflicts. It is easier to agree to financial terms when both parties are calm and level-headed rather than strained by the often-contentious issues of divorce.

Prenuptial agreements are viewed as cost-saving and preventive contracts. Arguments that might drag divorcing spouses into litigation are minimized when the parties agree on how assets should be divided before entering a union.

Legal advisors also say prenuptial contracts can be good ways to protect business interests. How much a business is worth, the projected value of the business and how it will be divided, if at all, in a divorce can be detailed in a prenuptial contract.

Valid prenuptial agreements that address business appreciation tell a divorce court judge how a couple wants assets to be divided should they end up choosing to split. A judge may allow a solid prenuptial contract to supersede state laws that dictate formulas for a community property split or equitable distribution.

For business owners, a prenup can mean the difference between the success and downfall of a company. Prenuptial contracts are flexible enough to include as much detail about the division of a business as is needed. Stock value and ownership rights can be laid out in an agreeable manner without the worry of future threats to the business.

Premarital contracts not only help divide assets. They can also portion debts. Agreeing by contract not to take on the responsibility of a married partner's bills can help thwart creditors and lawsuits after a divorce.

Getting a prenuptial agreement to stand up in court requires several moves before signing. Neither partner can be forced into a prenuptial agreement. The contract should be resolved well before couples marry. Each partner must have his or her own attorney review the proposed terms before signing. Using only one attorney could render the agreement invalid.

Finally, both parties must be honest throughout the process. All debts must be made known to a partner. Either party's attempt to hide assets or debts could invalidate a prenuptial agreement. The language within the contract must be transparent and exact to reap the most benefits.

Source: forbes.com, "Protecting Your Business In A Divorce: Pre-nuptial Agreement," Evangeline Gomez, Nov. 2, 2011

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