Unlike a unilateral will, a prenup is a bilateral agreement crafted between two people. Ideally, a prenup will be drafted in alignment with the corresponding will. However, in situations in which the two documents are in direct contradiction with one another, courts tend to prioritize the prenup over the will as long as the former document was negotiated fairly between the two involved parties.

A prenup can enhance an estate plan. For instance, it can protect the financial interests of children from prior marriages, keep family money safe or ensure that an inheritance is not taken away from the original beneficiary. It may also be appropriate when both spouses are financially independent.

These instruments are becoming increasingly popular for those who enter second marriages, marry later in life, enjoy financial independence or amass substantial assets prior to getting married. Prenups can also provide people with reassurance when a significant age difference is at play between spouses or one party has a massive amount of debt, such as college loans, prior to the marriage.

What prenups can and cannot do

Although a prenup cannot serve as a replacement for a will, a prenup can spell out the minimum standards and waive certain inheritance rights. Spouses can agree to provide for one another as generously as they choose, which can end up being an extra layer of protection that transcends the basic, elective legal entitlements.

A flexible prenup can also include an adjusting formula. For instance, it can tie a share of the inheritance to the actual duration of the marriage, which is known as an escalator clause.

Spousal rights vary among states, but they usually comprise one-half to one-third of the estate. A bereaved spouse may also be able to claim other allowances, potentially including the following:

• Homestead: A right to remain in the marital home.
• Personal property: A right to items such as housewares and furniture.

A prenup enables a spouse to decline either some or all of these rights. Frequently, after one spouse dies, the living spouse is allowed to stay rent free in the marital home for the rest of his or her life. Conversely, a prenup may instead specify that the surviving spouse cannot receive a share of the family business. It is all relative.

But there are limits to what a prenup can achieve. It is normally confined to assets and property rather than details such as child custody or support. Prenups must be in writing as well, seeing as how verbal promises do not qualify. Many prenups have been challenged in court as an indication of certain boundaries, such as:

• Attorney conflict of interest: if sharing the same attorney prompts favoritism.
• Fraud or a misrepresentation of assets.
• Unconscionable or inequitable behavior.
• Coercion or duress, though a threat to call off the marriage does not count.

Clarifying who owns what

Parties who are considering a prenup must disclose the full extent of their assets to one another. At the very least, they must waive disclosure. Describing exactly who owns each asset is helpful in terms of preventing marital conflicts or family discord over the estate. A prenup can expressly state that an asset is separately, not jointly, owned, even in reference to the couple’s home itself.

Normally, assets that were acquired before the marriage are classified as separate, and they can be willed to anyone. However, in community property states, shared marital property is almost always divided equally between spouses, though a prenup would allow couples to bypass the community property division.

Spouses should ensure that they do not inadvertently convert a separate asset to a joint asset. For example, someone might transfer the title of a separately owned house to a spouse or transfer funds into a joint bank account. Even adding a spouse to a checking account for the sake of facilitating a credit card can create joint implications.

Many fear that a prenup might birth feelings of mistrust. Instead, think of it as marriage insurance. No one buys life insurance expecting to die prematurely or auto insurance counting on a car accident to happen soon. Likewise, a prenup offers peace of mind, honest knowledge of each other’s finances and the assurance of fewer estate conflicts over money.

If you think you might benefit from such an arrangement, discuss your individual circumstances with your attorney today.

Intangible assets have long existed — rights such as copyrights, leases and government subsidies — but other electronic properties are gaining recognition, too. Intangibles run a wide spectrum, from patents and trademarks to less visible concepts like culture and networking or to even more latent infrastructure, such as industry protocols, standards or trusts.

Examples include:

• Brand names.
• Internet domains and social media presences.
• Noncompetition and employment agreements.
• Computer software.
• Trade secrets and recipes processes.
• Customer lists.
• Order backlogs.
• Licenses, leases and royalties.
• Government grants.

The art of valuation

In general, if a company derives much of its value from intangible assets, it typically warrants a higher discount rate and a more conservative approach. One drawback of discount rate analysis is that it is easy to manipulate to arrive at the required valuation. Compounding the dilemma, even slight adjustments have amplified ramifications. Think of it like the Hubble telescope — move it a quarter of an inch, and you’re in a different galaxy.

A decision to increase or decrease the discount rate may come down to idiosyncratic factors. Patents, for example, provide differing levels of protection, depending on their remaining term. A longer remaining life could increase the discounted cash flow. By contrast, that same patent might actually lead you to reduce your estimated cash flow if it were nearing expiration. How many years does it have left to run, what’s the nature of the competitive landscape, and does a firm’s process generate additional patents over time?

Interpreting goodwill

Goodwill is exceptionally difficult to evaluate. Assets like trademarks, patents or customer lists are somewhat easier to pin down, but goodwill is vulnerable to manipulation.

Some companies are organically driven and may not even utilize a line item for goodwill. Others, during an aggressive growth mode, might lump many components of goodwill together. Coca-Cola is often cited as exemplifying how organic goodwill can be worth billions of dollars, vastly more than the rest of a company’s assets. Coca-Cola’s product consists of water, corn syrup and flavoring, but the company has tremendous brand and secret-recipe value.

What is the underlying reason for the existence of a particular item of goodwill? Is it relevant to longer-term business exposures and strategies? Does that goodwill help a firm establish a position or become more involved in trends driving the global economy? At the crux, is it more economical to buy a new business line of activities or to create it in-house?

Current accounting rules call for a rapid write-down for any impairment of that elusive goodwill balance sheet entry. In simple terms, goodwill represents the excess amount an acquirer is willing to pay over the fair value of a unit — the price that would be received in an orderly transaction between market participants. Yet analysts struggle mightily with impairments.

For any acquisition, the purchase price only applies to Day 1. The slope gets slipperier for a nonfinite asset with no expiration, like a trademark. Rather than amortizing and writing down these assets over time, companies must retest them annually. The technology may even become obsolete, in which case that entire investment should theoretically be written down to zero. But management would then have to admit a huge mistake. Few are eager to do so!

It can happen, however. Goodwill sometimes provides justification for the price of an acquisition. For example, Warren Buffett wrote down the value of the Kraft and Oscar Mayer brands inside the Kraft Heinz Company. The company concluded it had overpaid in goodwill when Heinz acquired the Kraft name. Although relatively little had changed, the company considered it imprudent to carry those brand values at overstated valuations.

A new outlook

Older gauges may not adequately capture today’s business themes: the compression of time, technological change, enhanced communications, globalization and network effects. None of these concepts are easy to operationalize in concrete corporate terms. As investments shift in emphasis toward ideas and relationships, investors may want to take into account the role of intangible elements in their portfolio holdings.

For a deeper dive into the role and weight of intangibles among your own investments, ask your financial adviser how these features may be reflected in your asset lineup.

There are two big tax benefits you get when owning a home: You can deduct the mortgage interest that you pay each year and you can deduct at least a portion of your property taxes.

Mortgage interest deduction: The most valuable tax benefit is the mortgage interest deduction. This perk allows you to deduct the interest you pay each year on any mortgage that you use to buy, build or improve your primary residence or a second home.

Under federal law, you can deduct the interest you pay on up to $750,000 of combined mortgage debt if you are filing your taxes as an individual or as a married couple filing jointly. Married couples filing separately can deduct up to $375,000 in mortgage debt. (Higher limits apply if you bought your home on or before the end of 2017 — check the IRS for details.)

What’s especially nice is that these deduction rules don’t apply only to the mortgage you used to buy your primary residence. You can also deduct the interest you pay on a second home. Remember, though, that you can only deduct up to a combined $750,000 in interest, no matter how many mortgages you have.

You can deduct the interest — again up to the federal limits spelled out above — on home equity loans and home equity lines of credit, too. But to take the deduction, you must use the funds from these loans to make improvements to your primary or second home. If you use the dollars from these home equity loans to pay down credit card debt or cover your child’s college tuition, you can’t deduct the interest you paid on them.

Property tax deduction: You can also deduct the state and local property taxes that you pay each year on your home, though this deduction might not be as valuable if you live in a state in which property taxes are especially high. That’s because you can only deduct up to $10,000 for state and local taxes each year, a change that went into effect after Congress passed the Tax Cuts and Jobs Act in 2017.

If you live in a state in which property taxes routinely soar past that $10,000 limit, then you won’t be able to deduct all the money you spend each year on these taxes. That $10,000 cap is for a combination of taxes, including state and local income and sales taxes, too, which means that in high-property-tax states, you’re more likely to be paying more than the limit.

Still, you’re at least able to deduct some of the property taxes that you pay, providing a bit of relief when you file your income taxes each year.

This is just a summary; there may be other provisions that affect you. The point is that you have to look at the big picture. To understand in detail how home ownership will affect your bottom line, work with a financial professional.

Employers generally must withhold income tax from employees’ wages. To figure out how much tax to withhold, you need to use the employee’s Form W-4, the appropriate method and the appropriate withholding table described in Publication 15-T, Federal Income Tax Withholding Methods. You’ll deposit your withholdings based on your business and the amount you withhold.

File returns four times a year, and at the end of the year, prepare and file Form W-2, Wage and Tax Statement, to report wages, tips and other compensation paid to employees. Each employee needs a completed copy. You will use Form W-3, Transmittal of Wage and Tax Statements, to transmit Form W-2 to the Social Security Administration.

Other key responsibilities

You must withhold Social Security and Medicare taxes from employees’ wages and make sure they submit the matching amounts. (Something else to budget for!) To figure out how much tax to withhold, use the employee’s Form W-4 and the methods described in Publication 15, Employer’s Tax Guide, and Publication 15-A, Employer’s Supplemental Tax Guide. Deposit the taxes you withhold. You can find the detailed requirements for depositing on the IRS.gov website.

The current tax rate for Social Security is 6.2% for you and 6.2% for the employee. For Medicare, the current rate is 1.45% for you and 1.45% for the employee, or 2.9% total. Also, an Additional Medicare Tax applies to an individual’s Medicare wages that exceed a threshold amount based on the taxpayer’s filing status. You’ll withhold an Additional Medicare Tax of 0.9% for single filers who make more than $200,000. For married couples filing jointly, the threshold is $250,000, but if filing separately, $125,000. You don’t have to match this additional portion.

The government generally adjusts the earnings subject to Social Security each year. For 2023, the maximum earnings were $160,200.

Employers report and pay taxes under the Federal Unemployment Tax Act. The FUTA tax rate is 6.0%. The tax applies to the first $7,000 you pay to each employee as wages during the year. The $7,000 is often referred to as the federal or FUTA wage base. Your state wage base may be different based on the respective state’s rules.

Mark your calendar with key dates. The IRS has an Employment Tax Due Dates page with information on what you need to do and when you need to do it. The matching share of the Social Security and Medicare payroll taxes are collected as the Federal Insurance Contributions Act taxes and your part is considered a business expense, not a liability. Because it’s a business expense, it can be written off at tax time.

Don’t forget the states

This is just the beginning of an employer’s responsibilities. You are likely subject to state withholding rules as well. It’s essential that employers be on top of the general rules and any annual rate changes. Understanding these tax issues is important, since you bear the responsibility of fulfilling your tax obligations relating to your employees. It’s important to send out payments on time to avoid penalties and late fees. Be sure to work closely with financial professionals to make sure you stay compliant.