Bill and Melinda Gates apparently had no preparation. Here’s why you should consider one, rich or not
Bill and Melinda Gates
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Sure, you chances are nowhere near the wealth that the divorced Bill and Melinda Gates possess.
However, when it comes to protecting your assets from marriage, experts say it doesn’t really matter. If you are planning to get married, it can be useful to determine how you and your spouse would protect your assets and financial interests in the event that you end up going separate ways.
“Anyone with significant assets – in the eye of the beholder – that they either earned or inherited that are to be protected in the event of a divorce should consider a premarital arrangement,” said Gary Altman, Founder and Principal Attorney of the estate -planning law firm Altman & Associates.
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The Gates, valued at an estimated $ 130.3 billion and separated after 27 years of marriage, apparently had no prenup contract – a so-called “prenup”. Instead, according to published reports, a separation agreement – also known as a postnuptial agreement – sets out how their assets will be divided.
Most future newlyweds are unlikely to have a divorce in their future and therefore may find an arrangement unnecessary. However, when the unexpected event occurs – soon or decades later – try to negotiate who gets what, which could be challenging at best and devastating at worst.
“It’s about the idea of protection,” said certified financial planner Heather Comella, senior planner at Origin Financial Wellness Site. “Think if you would need these assets to survive if your marriage fell apart.”
Comella said that if you have children when you get married you must also consider how much you would need to support them over time.
A prenup could also indicate whether there would be spousal support – also known as alimony – in the event of a divorce or separation, said CFP Stacy Francis, president and CEO of Francis Financial in New York.
“We’ve also seen couples protecting each other from past debt problems or addiction problems,” Francis said.
If you’re expecting a large inheritance across the board, you may want a preliminary ruling to make sure those assets don’t get into the divorce equation at all, Francis said.
“The goal of good preparation should be to facilitate an honest discussion about finances, children, future goals and the financial consequences of the end of the marriage,” she added.
While marriage agreements have existed in various forms for centuries, they have been used increasingly in recent decades.
“Usage has increased, but not as much as I imagined,” said Altman, who has been in estate planning for more than three decades.
Altman now routinely asks his estate planning clients if they would like a clause in their legal documents requiring their children to enter into pre- or post-marital arrangements in order to access their inheritance.
“They say you can inherit $ 1 million, but you can only get it if you sign an agreement that says your spouse can’t have it,” Altman said.