8 Reasons Why You Should Get A Prenuptial Agreement

I have discovered a new blog dealing exclusively with prenuptial agreements at PrenuptialAgreements.org. Great content! Here is the author’s explanation of reasons to have a prenuptial agreement:


A prenuptial agreement is an agreement between two people that deals with the financial consequences of their marriage ending.

All marrying couples have a "prenuptial agreement" – it is known as "divorce law." However, a lot of people are unhappy with the way divorce law works, and prefer to take control of their lives, rather than leave it in the hands of the government. In these cases, it makes a lot of sense to get a customized prenup.

Getting a prenuptial agreement is particularly important in these 8 cases:

1. You are much wealthier than your partner. A prenuptial agreement can ensure that your partner is marrying you for who you are, and not for your money.

2. You earn much more than your partner. A prenuptial agreement can be used in many states to limit the amount of alimony that is payable.

3. You are remarrying. When you remarry, your legal and financial concerns are often very different than in your first marriage. You may have children from a previous marriage, support obligations, and own a home or other significant assets. A prenuptial agreement can ensure that when you pass away, your assets are distributed according to your wishes, and that neither your first family, nor your new family are cut off.

4. Your partner has a high debt load. If you are marrying someone with a significant debt load, and don’t want to be responsible for these debts if your marriage ends, then a prenuptial agreement can help ensure that this does not happen.

5. You own part of a business. Without a prenuptial agreement, when your marriage ends, your spouse could end up owning a share of your business. Your business partners may not want this to happen. A prenup can ensure that your spouse does not become an unwanted partner in your business.

6. To prevent your spouse from overturning your estate plan. A prenuptial agreement can ensure that you estate plan works, and, for instance, ensure that a specific heirloom remains in your family.

7. You are much poorer than your partner. Just as a prenuptial agreement can be used to protect a spouse who is well off, a prenup can also be used to ensure that the partner who is weaker financially is protected.

8. If you plan to quit your job to raise children. Quitting your job will negatively impact your income and your wealth. A prenuptial agreement can ensure that the financial burden of raising the children is shared fairly by both partners.

SOURCE: PrenuptialAgreements.org

Tax Treatment on Sale of Principal Residence by Divorced Couples

Married couples are allowed up to $500,000 ($250,000 each) in profits, tax free from the sale of their principal residence, as long as they have owned and occupied the residence as a principal residence for at least two of the five years before the sale. Formerly, a spouse who moved out as a result of divorce lost his or her $250,000 deduction because it was no longer the principal residence. However, thanks to a change in the tax law, an ex-spouse can now retain that exclusion.

The law contains a specific provision relating to property used by the spouse of a former spouse pursuant to a divorce decree (26 U.S.C. § 121 (d)(3B)). This section states that “an individual shall be treated as using property as such individual’s principal residence during any period of ownership while such individual’s spouse or former spouse is granted use of the property under a divorce or separation instrument.”
 
This addresses the case of where an individual has retained ownership in the house but where the former spouse occupies the house for a period of more than 3 years from the time the owner (the non-occupying individual) has vacated the home. This allows the non-occupying individual to exclude up to $250,000 of gain when the house is sold, even though he or she did not actually occupy the home for two of the last five years before the sale.

To qualify, the spouse who moved out must remain an owner and the divorce or separation agreement must grant that spouse the use of the home. If a spouse who is the sole owner remarries, the new spouse must live in the house for two years to qualify for the full $500,000 exclusion.   

SOURCE: DivorceNet

Georgia’s New Income Shares Child Support Guidelines

The new Georgia child support guidelines become effective January 1, 2007, and apply to all pending civil actions on or after January 1, 2007. Under the new guidelines, there are several steps that are used to arrive at a child support obligation. First, the gross income of both the mother and the father is determined. This income includes amounts from all non-exempt sources and includes: salary, wages, commissions, self-employed income, bonuses, overtime pay, severance pay, pension and retirement income, interest income, dividend income, trust income annuity income, capital gains, Social Security disability payments, worker’s compensation benefits, unemployment benefits, judgments from personal injury claims or other civil cases, gifts, prizes, alimony from persons not in the subject case, assets which are used for support of family, fringe benefits that significantly reduce living expenses, and any other income including imputed income. Variable income such as commissions or bonuses must be averaged over a reasonable period of time.

After the gross income of both the mother and father is determined, the income may be adjusted in three ways. If there is self-employed income, there is a reduction for one-half of the self-employment taxes being paid. Secondly, if either parent is paying child support under a preexisting child support order, the monthly gross income of such parent is reduced by the amount of monthly support such parent has been actually paying. Finally, if either parent is supporting his or her own children living in the home, but who are not the subject of this child support determination, the court in its discretion may reduce the gross income after calculating a theoretical child support order. This final adjustment will be difficult to obtain since the court must find the failure to do so would cause a financial hardship on the parent and that such adjustment is in the best interest of the child in the case at hand.

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