What is a Prenuptial Agreement?
A prenuptial agreement (prenup) – also called a premarital agreement – is a binding legal contract entered into between a couple prior to getting married. Spouse determine, prior to a potential divorce, how debts and assets will be divided up. There is also a less common post-nuptial contract that is when the division of important estate items is determined after the couple’s marriage.
This used to be considered something only wealthy people did, but today it is more common than people realize. There are many good reasons to execute such an agreement that protects all parties, including business, and more.
Benefits of a Prenuptial Contract
Better Communication
Talking to your future partner about a prenup may at first seem pretty daunting, but it can also help your relationship quite a bit if you’re able to both come to the conversation in a diplomatic way. Being open about your financial realities can help avoid tougher conversations later in your relationship, when the stakes could seem much higher.
Money and Time Saver
If you think a wedding is expensive, it can pale to what a divorce can cost you. By setting up a prenuptial agreement you are mitigating risks of the future expense of splitting up – not just personally, but dividing property, taxes, debit and more. A contract also ensures – even if there is a divorce – that the details and clauses of your separation are already figured out and, hence, less for the attorneys to do (and charge for)
Protect Family and Business Property
Another benefit is that this contract can protect things that a particular party has worked hard to establish – be it a business, wealth, property, etc. – and give them peace of mind during the relationship. Avoid contention down the road by establishing what exactly will and won’t happen with your acquired items so that a divorce lawyer isn’t suggesting you compromise and negotiate on terms that you’re not comfortable with.
Some Drawbacks to Premarital Agreements
Could Be Insecure Reaction
A prenup could potentially just simply be a bad idea, a poor decision. Sometimes, specific state laws could potentially accommodate your needs. Be sure to talk to an attorney familiar with your state’s marriage laws before you embark down this legal path. For example, if you’re good with a 50/50 split of assets acquired during the marriage, you may not need a premarital agreement.
Not Super Romantic
It kind of goes without saying, but it is worth a mention. The discussion about how to divide property and assets before you tie the knot can really take the wind out of the sails of the romance with your future spouse. Timing is everything here. Don’t wait till the church is picked, or the catering is ordered. That’s way too late. But don’t mention it on the first date, either. Feel out your partner and pick the best time he or she will be best prepared for the conversation.
It’s Not Always Equal
Less common, but it can still happen. With the uncomfortable nature of the situation coupled with an underlying assumption that divorce is unlikely, sometimes a party can agree to an unbalanced arrangement. And once some tensions hit the relationship, that lack of equity can start to rear its ugly head. So, first and foremost, if you go the route of a prenuptial or post-nuptial, be sure you are both walking away with an agreeable, equal share of things.
