Being practical about any life change requires that you consider the worst-case outcome. For those recently engaged, appropriate planning for the future often involves considering what might happen if they eventually get divorced.
Prenuptial agreements are important contracts between future spouses that help protect them during the marriage and if they eventually divorces. Every prenup needs to be unique to best suit the needs of the couple signing it, but there are three items that most couples will want in their prenup.
Agreements to set certain property aside as separate
When you marry, you and your spouse combine your finances. Even property that you owned prior to marriage can become marital property through commingling. One of the best ways to protect specific assets, like a home or an ownership stake in the business, requires that the couple set that property aside as separate property in their prenup. Anything from your fine art collection to your retirement account can be separate property that your spouse can’t touch in a divorce.
Guidelines about how to split your shared property
Talking about what contributions you expect to make to the marital estate now can help everyone in your family plan for the future. For example, you might agree to split your property a certain way while the two of you both work full-time but change the rules that you will use once you have children and one parent stays home to care for them. Having clear instructions about the division of your marital property in the prenup will take the conflict and uncertainty out of your divorce.
Agreements that protect you from your spouse’s bad behavior
Every person has their own issues, so each couple has unique concerns about the risks of marriage. Putting rules in place about the division of debt or penalty clauses that provide financial compensation to one spouse is a common practice.
Exploring the concerns you have will give you a better idea about what you need to protect in your prenuptial agreement. The more you plan, the more benefits you can derive from your marital agreement.