As one prepares to start the exciting new chapter of marriage, there are many important decisions to consider. From choosing the venue and guest list to picking out the perfect attire, there are plenty of details to keep everyone busy.
However, there’s one detail that individuals might not have considered yet: whether or not to sign a prenuptial (prenup) agreement. While some shy away from the idea of a prenup, it’s worth taking the time to understand what they are and why they can be a smart choice for some couples.
So, why should someone consider signing a prenup? Read on to find out.
What Is a Prenup?
Before we dive into why one might want to consider signing a prenup, let’s start with the basics. What exactly is a prenuptial agreement? A prenup is a legal agreement couples sign before marriage that outlines how the couple will handle their assets, property, and debt in case of a divorce or separation.
Prenups can cover everything from who gets the house and car(s) to how finances including bank accounts and retirement funds will be divided. A prenuptial agreement can also address issues like spousal support and inheritance.
Difference Between a Prenup and a Postnup
It’s likely to have heard of another legal agreement called a postnuptial agreement, or postnup. While similar to a prenup, the two have a few differences, the main distinction being timing. A prenuptial agreement is signed before a couple gets married, while a postnup is signed after marriage.
Sometimes, a postnup is used as a way for a couple to update their financial arrangements after they have been married and circumstances have changed. For example, when anticipating an inheritance or the sale of a business, parties may wish to discuss and plan accordingly.
Why Sign a Prenuptial Agreement?
While not every couple will find a prenup necessary or desirable, there are several situations where it can be an intelligent choice. Now that we’ve covered the basics of what a prenup is and how it differs from a postnup, let’s dive into why someone might want to sign one.
Maintain Clear Financial Distinction
Maintaining a clear distinction between finances can be especially important if one partner is wealthier or earns more money than the other. Without a prenuptial agreement, the higher-earning spouse could be required to pay spousal support to the other after a divorce and it is likely that any assets earned during the marriage will be divided equally upon divorce.
If one partner owns a business, a prenup that outlines finances can protect that business from being divided in divorce. A spouse could claim a portion of the business’s increase in value or income during the marriage without a prenup in place.
Establishing Property Rights and Allocation of Assets
Some states follow community property laws, where property acquired during the marriage is generally split equally between the spouses. Others follow equitable distribution laws, where the property is divided fairly and justly but not equally.
Without a prenuptial agreement, state laws will dictate how property and assets are divided in a divorce, which may not align with each party’s wishes. Signing a prenup ensures that both partners can set terms for how property and assets will be allocated in the event of a divorce. It gives both spouses more control over their financial futures and leaves less up to the court.
The prenuptial agreement can specify which assets are considered separate property and which are considered marital property. Separate property is usually property that was owned before the marriage, inherited during, or received as a gift.
Safeguarding a Spouse From the Debts of the Other
If there is no prenuptial agreement, it’s possible that a court could order one spouse to pay off the other spouse’s debt as part of a divorce settlement, like student loans or credit card debt that was accumulated or refinanced during the marriage. It can be a significant burden, especially if the debt is substantial.
Provisions in a prenup that specify that each spouse is responsible for their debt can eliminate this possibility. This can provide peace of mind and help to avoid financial strain on the relationship.
Minimizing Lengthy Court Proceedings
When a couple gets divorced, they typically go through a lengthy process to divide their property and assets. This process can be time-consuming, stressful, and expensive, especially if the couple can’t decide how to divide their assets.
However, many of these issues can be resolved quickly and easily if a couple has a prenuptial agreement. Because a prenup already specifies how property and assets should be divided, there is often less need for lengthy court proceedings.
Maintaining Open Communication and Preparing for the Possibility of Divorce
While it’s not the most romantic topic to discuss, the reality is that many marriages end in divorce. Couples can openly communicate their finances, expectations, and concerns by exploring and creating a prenuptial agreement. This can help establish a strong foundation of trust and communication, which can benefit the relationship in the long run.
Additionally, creating a prenup can help couples to prepare for the possibility of divorce by laying out a clear plan for how assets, property, and debts should be divided.
Protecting Family Assets and Estate Planning
A spouse may have significant assets that were inherited or that they want to pass down to children. A prenuptial agreement can help protect the children and distribute those assets according to the party’s wishes. In conjunction with a will or living trust, this can help prevent disputes among children and family members by ensuring each spouse’s wishes are fulfilled.
Turn to M. Sue Wilson Law Offices for Prenup Help
Ultimately, whether or not to sign a prenup is a personal decision that should be made after careful consideration and discussion between both parties. It’s essential to approach the topic openly and honestly. Work with an experienced attorney to ensure the prenuptial agreement is legally valid and addresses all concerns.
M. Sue Wilson Law Offices has extensive experience in family law and can provide the guidance and support needed. Contact M. Sue Wilson Law Offices today to speak with our experienced legal team about prenuptial agreements.
This article contains general legal information and does not provide legal advice. For legal advice, please contact M. Sue Wilson Law Offices directly.