Learn To Love The Prenup


Signing on this dotted line could safeguard your financial future.

Entrepreneurial endeavors are another tricky area. When marriages end, the collective booty can involve products, entire companies, and even the right to sell products under a person's name. Amy*, a cosmetologist who married a dermatologist in 1987, tells how she worked in tandem with her spouse for more than a decade to create a large operation in cosmetology and skincare.

As she puts it now, "When you start out in the beginning with a first marriage, you don't even think of a prenup. We went into the marriage with nothing other than the dream to build something." The couple's empire, which became wildly successful, included businesses Amy started under the umbrella of her husband's practice.

By the time their 15-year marriage crumbled, the companies were deeply intertwined. Because her husband had owned the practice at the start, and her businesses were added after the marriage, he got to keep his ventures—but she ended up having to divide hers, 50-50.

"Everything I would have had a chance to make money from was valued low, and everything he had was valued high," she recalls of the court's decision. She was blown away. In the end, she felt forced to let her ex buy her out of her companies, one of which bore her name. "I can't even use my own name now on a business," she adds, with a chuckle not entirely devoid of bitterness. "There's a lesson for other women to learn here." Divorce Insurance: Depressing Or Practical?

As more people bring children from prior marriages into new relationships, they're finding that prenups are a good way to make sure their kids are covered as well. State laws differ, and a will may not protect them enough. For example, if a parent dies after marrying a new spouse, what would have been that person's half of the marital assets will be passed along to the spouse, not the kids.

There's also the more amorphous issue of caring for the children during life. As more women opt out of the workforce, the right prenuptial agreement can inject some economic parity into the world of the stay-at-home mom. Wives (or husbands, for that matter) who take years away from their professions to raise kids can be guaranteed financial compensation for their efforts if the marriage ends—and they're suddenly high and dry, with no breadwinning spouse or career track.