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Why families sometimes insist on prenuptial agreements

The decision to enter into a premarital contract is one that should be made by two fully informed individuals, with a shared desire to outline the terms of a potential divorce. However, there are cases in which New Jersey families require prenuptial agreements as part of an estate planning approach. While that may seem heavy handed to some, the reasoning behind such a move is solid.

Inherited wealth is a gift that is handed down from one generation to the next. Very often, those assets were accumulated through a great deal of hard work, or by taking family wealth and expanding it through savvy investment or business choices. Families want to ensure that the fruits of those labors remain within the family, and are not lost due to the property division portion of a divorce. That is why a prenup is required for many family members who are expected to receive an inheritance.

In most cases, the family wants the new couple to live long and happy lives together, and for the marriage to thrive. The hope is that the newly married couple will be able to enjoy the inheritance for decades. That said, the family wants to protect against inherited wealth being lost due to a divorce, especially if that divorce should come early in the marriage.

When discussing prenuptial agreements and estate planning, New Jersey couples should try to keep an open mind. Even when a family requires a prenup as part of an inheritance structure, there are still benefits to be had for both parties of the agreement. It is also important to note that negotiation is always possible, and any terms that one side finds unacceptable can be altered or removed prior to signing the completed document.

Source: wealthmanagement.com, "Seven Tips For Managing Sibling Wealth Disparity", Doug Baumoel and Blair Trippe, June 29, 2017

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