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How can a prenup protect your investments?

On Behalf of | May 10, 2021 | Divorce & Legal Separation |

If you have built up some lucrative investments over the years, you likely want to protect them from division in a divorce. As with other assets, drafting a prenuptial agreement with your spouse could save you a lot of heartache by giving you a say in what happens to your investments in the event the two of you decide to end your marriage.

As U.S. News and World Report points out, a prenuptial agreement may help you to keep your investments for yourself, but it can do much more. You might have plans for your family members to receive your investment accounts at a later date.

Help your children receive an inheritance

If you want to pass your investments to your children after you die, you will want to make sure that another person cannot stake a claim to your investment. For example, if you have children from a prior relationship but then remarry, your investments may go to your new spouse instead.

While your spouse might hand your investments over to your children anyway, some spouses in this situation favor their own biological children when it comes to an inheritance. With a prenuptial agreement, you can work out who should have inheritance rights over your property.

Reinforce your beneficiary designation

Many investment accounts make it easy to designate a beneficiary. For instance, if you have a mutual fund account and you name your children as beneficiaries, your account will pay out to your offspring after you die. Still, this is not a given. You might end up in a contentious divorce where your spouse contests for a share of your account, or there could be estate litigation after your death between your spouse and your children.

Drafting a prenuptial agreement that addresses your investments can reinforce your beneficiary wishes. It may close off divorce as an avenue to contest your accounts. You might also reinforce your agreement by keeping your investment finances separate from your marital accounts and maintaining good records of your transactions to prove that your investments are not marital property.