A prenup can be a scary word for some couples heading toward marriage. However, there are many benefits to drafting one of these agreements before you tie the knot. Recently, prenups have become more common, and they are no longer restricted to the extremely wealthy. Couples with all levels of assets and income can use them to create mutually-beneficial outcomes and proactive solutions to the problems many couples face now – having children from other relationships. Although prenups can cover finances and property, couples also use them as a means to discuss priorities, procedures, and settlements should either of them die or they divorce.
A prenuptial agreement is a contract between soon-to-be spouses that outlines how to handle the distribution of an estate upon the death of one of the parties or a potential divorce, should one arise. A prenup can cover many different aspects regarding the division of an estate, such as what property is going to be considered individual property to the exclusion of the other. It can also address different scenarios like how certain expenses will be paid, what happens if a piece of property brought into the marriage is sold and the profit used to buy another property, or what the expectation is with an inheritance.
One limitation is that clauses within prenups dealing with issues surrounding the care and custody of children will not be upheld. Still, prenups work to reduce the court’s involvement and help save time and money if a divorce happens.
Generally, couples use prenups to establish guidelines for the marriage. “Perhaps most importantly, couples can use a prenup to learn more about one another, about both finances and their marriage expectations,” says Attorney Heather O’Connor of O’Connor Family Law. “This discussion helps solve disputes before they arise and sets expectations before the marriage begins.”
Deciding divorce terms as to-be newlyweds may be easier than negotiating as bitter divorcees or entering into a probate dispute post death. By drafting a prenup, couples can practice conflict mediation and decide important matters for entering a marriage. They can gauge how well they currently communicate or deal with stress or emotional issues. Because it helps to set the expectations, it also helps prevent an escalating fight for property and diffuse any potential personal and emotional matters from complicating divorce or probate proceedings.
In addition to property and behavior expectations, the parties can also state a preference to utilize the laws of the state where they live at the time they enter into a prenuptial agreement rather than the state holding jurisdiction at the termination of the marriage.
Financial situations
For many, prenuptial agreements center around retaining pre-marriage finances and earned income. If one spouse is the “breadwinner,” he or she may want to protect their hard-earned income. Likewise, couples may want to keep their finances private from the public. In these circumstances, spouses may include a confidentiality clause within their prenup to help keep marriage matters private from the general public. By including financial prenup situations, couples can gain more freedom to act as they would individually prior to the marriage.
Property rights
One person owning property or assets prior to the marriage is another reason to get a prenup. These contracts may help each spouse retain a sense of serenity and assurance knowing his or her own possessions will remain untouched if the marriage ends. Similarly, a prenup can help dictate how assets acquired during the marriage will be categorized and potentially divided as well as to what extent purchase decisions are to be made as a couple. Couples are also more commonly creating “pet prenups” to establish who will take care of the family pet in the event of the divorce.
Debt security
Sometimes newlyweds don’t know what their spouse’s financial situation looks like. Additionally, debt may grow during marriage and a divorce settlement may force each spouse to have equal responsibility for paying it off. A prenup can help spouses understand current and future financial situations and solve any potential disagreements. Since finances are a common issue for couples, creating a prenup agreement can uncover potential problems before they happen and produce a remedy. We’ve heard many cases where one party complains they had no idea how much debt their spouse had entering the marriage. Going through the prenuptial process requires a full financial disclosure, so these types of surprises can be avoided.
Business protection
If a spouse owns a business, a prenuptial agreement detailing business protection from divorce may be useful. In some instances, a divorcing spouse would be entitled to a portion of the other’s business within a divorce unless a prenuptial agreement provides the needed layer of protection. Not protecting a business that was established before the marriage can be extremely costly to not only the spouse who controls and operates the company and any partners, but to the business as a whole. We have seen businesses have to shut down because they could not make it through the divorce process. By entering into a prenup, the business owner can feel safer as the business can be freed from the potential effects of divorce and remain in the hands of those who operate. If you are a business partner with someone who is getting married, you should encourage them strongly to enter into a prenuptial agreement as well as create a business agreement if you do not already have one.
If you want a prenup but your partner doesn’t, the worst thing you can do is get defensive or start to think your partner is trying to use you. Instead, remain calm and talk about planning the foundation for your marriage. Begin with discussions relevant to what will make up these contracts, such as, “How do you think we should hold the income we earn?” or “Should we have separate or joint bank accounts?” and then work your way up through the more complex issues. Once you’ve come to an agreement, it’s easier to simply ask for that agreement to be memorialized. Despite their stigma, prenups aren’t always used to exclude valuables from your partner. Prenups can be used to help define an ever-evolving marriage and set parameters so the expectations and responsibilities of each party are clear.
A prenup can be as exhaustive or as narrow as a couple decides. The simplest way to draft one is to talk with your partner and work out your concerns as a couple. To create a premarital agreement, each spouse must have individual legal counsel, but that does not mean it has to be a contentious process. This is to ensure that both parties really do understand what his or her rights are and what they are gaining or giving up with the terms they agree upon. A prenup attorney can help couples create thorough, viable agreements that meet legal requirements in order to be upheld. In doing so, couples can help define their marriage and address the issues on their minds before beginning a life together as newlyweds.
As an author, I have written so many articles on love and relation.
This article is about something new, especially before your marriage.
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