Premarital agreements are often associated with the wealthy. The cliche goes as follows: A young, attractive woman weds an older, wealthy man who insists on signing a premarital agreement in order for the marriage to occur so that he does not have to share his finances in the event of a divorce. While it is true that some wealthy people chose to enter premarital agreements, this is not the most common reason.
One Spouse is a Business Owner
If a couple decides to get married and one partner is a business owner, he or she may want to protect his or her business in the event of a divorce — business assets earned during the course of a marriage are considered marital property.
For example, if a small business was only worth a few thousand dollars before the marriage, but worth $4 million 10 years later at the time of divorce, essentially all of the business is marital property. Furthermore, because the business cannot be chopped up and sold just for the other partner to get his or her fair share of the marital property, he or she will either become a partial owner or will end up with the majority of the other marital property. Moreover, the value of a business is difficult to determine. The other party’s attorney may overvalue the business, thus leaving the business owner with even less of the other marital property. While the non-business owner is awarded the house, vehicles, furniture, bank accounts, and investments, the other spouse could only be left with the business, which may technically be worth a fair amount, but it would have to be sold to pay for a new home.
If one of the spouses has a large amount of debt, then his or her credit can negatively impact the credit score of the other spouse once the couple is married and has joint credit cards. According to Credit.com, however, a premarital agreement can include a clause stating that credit scores must be checked frequently and that the marriage will not have any joint credit cards or shared bank accounts. Any additional measures may also be included to protect one spouse from the poor credit (and debt collectors) of the other.
It is even more important to consider debt. While debt prior to a marriage remains the debt of each spouse, debt incurred during the marriage becomes both of the spouse’s debt. Student loans, car loans, mortgages, credit card debt, and all other forms of secured and unsecured loans become marital property.
Reach Out to an Attorney for Help
Illinois is an equitable division of marital property state, according to 750 ILCS 5/503. As such, all debts, businesses, and credit are shared when obtained during a marriage, and this marital property is split “fairly.” A premarital agreement offers business partners reassurance and provides a degree of protection for spouses with good credit, making it easier to get loans that will benefit both spouses. For more information about how a premarital agreement can help your marriage, contact the dedicated DuPage County family law attorneys at the office of Momkus McCluskey LLC. today.