People often think that only the extremely wealthy need prenuptial agreements; however, with divorce now a common event in people’s lives, more and more couples can benefit from using them. While many people, understandably, find such topics uncomfortable to discuss before a wedding, the protection prenuptial agreements provide can save much heartache later.

How Prenuptial Agreements Work

In Illinois, prenuptial agreements are governed by the Illinois Uniform Premarital Agreement Act. This act sets out the general rules about topics that premarital agreements can regulate, which include:

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Ordinarily, the transfer of property comes with some sort of tax consequences. Since divorces can involve a lot of property transfer, you might expect complicated taxes surrounding them. Fortunately, the IRS exempts from taxation most property exchanges that take place in a divorce; however, appreciated assets, like stocks, and retirement accounts both come with particular tax issues.

General Tax Rules

Section 1041 of the Internal Revenue Code governs transfers between spouses and transfers related to divorces. The law generally exempts transfers so long as the transfer happens prior to the finalization of the divorce. The code also excuses transfers made after the divorce, so long as they are “incident” to it. A transfer counts as incident when it occurs within one year of the end of the marriage, or within six years of the end of the marriage if the divorce agreement requires such a transfer.

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When considering a divorce, many people concern themselves with the division of their marital property. While this is an important thing to worry about, the courts will divide more than just the couple’s assets. The judge will also mete out the marital debts to each of the spouses. However, the law does not make spouses responsible for the entirety of each other’s debt. Instead, the Illinois Rights of Married Persons Act clarifies which debts qualify as marital and which debts fall solely to one spouse.

Which Debts Get Divided?

The court will divide up a couple’s marital debts, while leaving each spouse solely responsible for their non-marital debt. That still leaves the question of which debts fall into which category. Generally speaking, marital debts are debts that both spouses acquire jointly or debts one spouse acquires for the family. For example, many spouses have joint credit cards. Since both spouses put their name on the card, they both agreed to bear responsibility for the debt.

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Researchers can see a new trend in those filing for divorce. In the past twenty-five years, the divorce rate more than doubled for people ages 50 and up. According to a recent study, divorces among that age group accounted for less than 10 percent of all divorces in 1990. But by 2010, divorces between people over 50, or baby boomer divorces, made up 25 percent of all divorces, with that growth occurring even as the overall divorce rate fell. Additionally, in a recent survey of members of the American Association of Matrimonial Lawyers, 61 percent responded that they saw an increase in the number of older couples looking for a divorce.

Reasons Why

Scientists point to several reasons for the increased prevalence of this type of divorce. First, many adults in this age group have already experienced divorce once and moved on to a second marriage. This experience removes some of the mystery surrounding divorce, and makes them more comfortable with the idea of getting a divorce. Second, the rising amount of women in the workforce means that women can better support themselves outside of the marriage, so they no longer need to stay with their partner for financial security.  Third, as people live longer, marriages get more exposure to the risk of divorce. This last point represents a cultural shift in how people view marriage, placing more emphasis on individual fulfillment and satisfaction, which can be hard to sustain for long periods of time. Things to Consider Gray divorces often come with an added level of complexity, since the spouses may have more or different assets than younger couples. One of the biggest differences comes in the form of retirement assets like pensions or 401(k) plans. In many gray divorces at least one, if not both spouses, received these assets from past jobs, and may have more than one each in some cases. The courts must determine the marital portion and equitably divide the marital portion among the spouses, a process that gets further complicated by the tax provisions surrounding the retirement plans. Other unique situations also affect grey divorces. Social security, for instance, presents a more pressing concern for this class of divorce, and some spouses will qualify for spousal support under it based on the ex-spouse’s earnings. If you have found yourself in the middle of a divorce, or are considering seeking one yourself consult an Illinois family law attorney. Their expertise can help protect your interests in court.

Occasionally, people decide that they need a prenuptial agreement before saying yes to marriage.  That can be to protect assets such as a home or business in the event of a divorce.  It is easy to understand a prenup if you consider it a type of contract in case the marriage ends.  The prenup will define how assets will be divided and acts as a blueprint for other aspects of divorce including spousal support.

Prenuptial agreements are appropriate for those with a large amount of assets or a small amount and are becoming more popular in the last couple of years.  However, a prenuptial agreement is not always considered valid if certain mistakes are made during the process.  In order to avoid those critical errors, it is important to understand what they are.

1. Not Disclosing or Undervaluing Assets

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