Protecting Property
If you own the family home before marriage or you contributed a much larger down payment or made the mortgage payments, you do not get a credit for any of these amounts.
If you have a $1MIL home on the date of marriage and it is now worth $2MIL, assuming no mortgage, your spouse’s entitlement is $1MIL. You will have to refinance or sell the home to pay out their interest.
If you have a marriage contract, you can get your initial $1MIL investment and any additional mortgage payments, reimbursed with the balance of the equity to be shared equally. This leads to a much fairer result.
Protecting Your Pension
People are shocked to learn that the value of their pension during marriage must be shared.
For example, if the net value of your pension is $500,000, you will need to buy out their $250,000 share. You can do so, from the proceeds of your home sale or other investments or you will need to transfer that amount directly from your pension, which means you will need to continue working longer than planned.
If you have a marriage contract that excludes the value of your pension and any growth during marriage, you can avoid this situation.
Existing Debt
A marriage contract can also protect you from any financial liabilities your spouse incurs, including:
- · Pre-marriage debt
- · Business debts
- · Loans
If your spouse has significant debt – student loan or otherwise, a marriage contract can ensure that you are not required to pay a higher equalization payment because of the debt.
