Prenuptial agreements are not unique to this generation. For decades, engaged couples have used them to protect each person’s respective assets in the event of divorce, especially if one or both parties were of high net worth. What has changed is the type of property being protected. In addition to money, retirement accounts, real estate, and commercial holdings, millennials in particular are taking steps to protect their intellectual property.
Intellectual Property Defined
Intellectual property refers to the ownership of ideas and concepts. Examples of such property includes (but is not limited to):
- Literary works such as books and screenplays
- Art such as paintings and sculptures
- Technological creations such as software and apps
- Scientific and medical developments and ideas
Under ordinary circumstances, these creations are protected from third-party infringement by copyrights, patents, trademarks, and similar safeguards. With couples, it’s a different matter altogether because even intellectual works and the profits they generate can be subject to division in a divorce settlement.
When Does Intellectual Property Become a Marital Asset?
Marital property refers to any assets, tangible and otherwise, that are acquired during the marriage but prior to separation. It may also include the appreciation in value of any property that was owned by one spouse prior to the marriage but sustained by marital funds and effort afterwards. While intangible assets such as royalties, copyrights and patents may not always produce a reliable income, their potential to generate profits and increase in value remain.
Whether or not an intellectual work becomes marital property depends on the circumstances of its development and creation. If, for example, a musician wrote a hit song while his wife worked outside the home to support his ambitions, any royalties from that song could be distributed in a divorce settlement because of her contribution. But if a writer completed a manuscript prior to the marriage and finds a publisher for it afterwards, any income from the book might not necessarily become marital property because the other spouse did not contribute toward its creation or development.
By including such potential assets in a prenuptial agreement, millennials are addressing the possibility of future income that could conceivably come from their ideas and creations. Without the agreement, the division of these assets could potentially be unfair to the original creator should a divorce ever occur.
If you are planning to get married soon and need assistance in drafting a prenuptial agreement, contact Freed Marcroft today. We will help you safeguard your future by accounting for intellectual property as well as tangible assets, so that if the marriage ever does end, you will be able to continue benefiting fairly from what you worked so hard to create.