The idea of signing a pre-nuptial agreement has always had a stigma attached to it. Some people believe that maybe one person has doubt about the marriage or that the person has more interest in their personal possessions than they do their spouse. These assumptions are usually not true and as a matter of fact, prenuptial agreements have been on the rise.
What exactly is a prenuptial agreement?
A prenuptial agreement is a written contract set up to guide the rules for the division of property in the case of divorce. A prenuptial (also known as a prenup) agreement is set up to be a comprehensive way to decide how the assets and liabilities will be treated. You can also give direction in a prenup for such things as alimony and exposure limits on social media.
What if we don’t make a prenup?
If you do not have a prenuptial agreement in place, your spouse will be entitled to half of the property that was earned and accumulated during the marriage. In addition, you are not allowed to waive your rights to spousal support or pre-agree to a set amount.
Do I need a prenuptial agreement?
A prenuptial agreement should be considered if either you or your spouse:
- Have children or grandchildren
- Is an owner of a business or is a partner in a business
- Own high-end assets or have accumulated significant property
- Has more wealth than your soon to be spouse, typically twice as much
- Plan on supporting the other spouse as they go to college or specialty school
- Has a significant amount of debt
The pros and cons of a prenuptial agreement
Pros:
- Can establish rules for significant financial considerations such as businesses, property and spousal support.
- The division of the marital assets will be much easier since a pre-determination has been set-up.
- Can keep the inheritance the children receive from a previous marriage.
Cons:
- If you played a role in contributing to the success of your spouse’s business, you may not be able to claim a share of the profits.
- A spouse may agree to certain terms that they may not agree with once the marriage comes to an end.
- A low-income spouse may not be able to enjoy the lifestyle they may have become accustomed to once the marriage dissolves.
Your decision on establishing a prenuptial agreement is something that should be discussed with your soon to be spouse. It can offer protections you may not be currently aware of that may prove vital in the future.