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Practical Planning Tip: Women and Wealth - The Importance of a Prenuptial Agreement

March 18, 2024

Today we’re going to continue our discussion of women & wealth. Since it is Women’s history month, The videos through the end of March will be on this topic. Today's focus will be on Why women need a prenuptial agreement to protect their wealth.

 

So, in the last two videos we discussed statistics and recurring themes when it comes to women. Now let’s apply those themes to proper planning by first discussing how Marriage and Divorce Planning has evolved over time.

So, According to the U.S. Census Bureau, in the past 50 years, the average age of women marrying for the first time increased from 20.8 to 27.8 years old.

Primary factors for this trend include the growth of educational and employment opportunities for women. Consequently, women are entering into marriage with MORE assets and greater earnings potential than ever before.

On the flipside, divorce has become a bigger reality for millions of women. Given the changing matrimonial landscape, it’s important for financial advisors, CPAs, and attorneys to advise their female clients to consider the impact of evolving gender roles have on marriage and divorce.

The first point to consider are Prenuptial agreements or prenups. A prenup is an attractive option for women seeking to protect their premarital assets and future career or business prospects. In a prenup, a couple can agree on terms that would complement their anticipated family structure.

For example, both spouses may work during the marriage and possess similar financial means. As a result, they may prefer to enter into a prenup that provides that their earnings would remain separate in the unfortunate event of a divorce.

Alternatively, a couple may opt for an arrangement in which one spouse works outside of the home and the other spouse primarily raises the children. So, the couple may prefer to split the assets accumulated DURING the marriage and provide for spousal support in the event of divorce.

…many folks watching this may be thinking that Starting with a discussion on divorce may be a bit of a downer, however, the foundation of any successful marriage is going in with eyes wide open. A healthy and open relationship with money between two partners means understanding AND RESPECTING each other’s financial situation by drafting a prenup. It may save a lot of headache, heartache, and stress down the road.

Furthermore, With the largest intergenerational transfer of wealth taking place, the role of women in managing and safeguarding family assets shouldn’t be overlooked. Protecting gifts, inheritances, and family businesses are significant benefits that women may get from taking the time to draft a proper prenup.

 

You can WATCH the full video here.