A Rational Guide to Prenups
Premarital agreements—also called prenuptial agreements or “prenups”—allow spouses to share important financial information and plan for their future.
Don’t think of prenups as precursors to a divorce. Think about them as honest disclosures prior to a marriage. You are sharing personal finance information with your future spouse. This is a positive. Buckle in . . . these are prenups.
What do prenups cover:
- How separate property will be treated during the marriage and in a divorce. If you live in a community property state, you need to know the difference between community property and separate. This matters A LOT.
- How property acquired during the marriage will be treated by both spouses and in the case of a divorce. If you are both working, most of your income during marriage will be community property. Maybe this works for you and maybe it doesn’t.
- Whether a dependent spouse has a right to receive alimony or post-separation support, and the terms of any alimony payments. Alimony is useful in some cases, but you want to explore the pros and cons.
- What happens to property upon the death of either spouse (estate planning issues). Get Wills drafted by a qualified Estate Planning attorney or draft your own with a program.
- Any other issue relating to the marriage that doesn’t violate public policy. You can’t prohibit your spouse from marrying Texans in the future. At least I don’t think you can.
Note that some of these issues are related to how the couple will treat financial matters during the marriage, not just in the case of a divorce.
Financial problems are a common cause of divorce and marital fighting and a premarital agreement can avoid some of these problems before they happen. Be rational.
Who Needs a Prenup?
Any couple that’s about to get married could benefit from a prenup, both some people have more of a need than others.
If you have valuable assets or own a business, you may have a stronger need for a prenuptial agreement.
Those who bring wealth or debt into a marriage. You need prenups. This means anyone from 18-118 who might inherit in the future too.
Couples who have significant disparities in their assets or income are also good candidates for prenups. Marrying a sugar daddy or mama? They will want a prenup.
If you have children from a previous marriage, you may want to use a premarital agreement to clarify which pieces of property you’d like to set aside for your children. Blended family planning is crucial.
Conclusion
Prenuptial agreements are an effective tool for settling financial issues that arise during a marriage or divorce, but they need to be carefully drafted to address your unique circumstances. If you are considering signing or creating a premarital agreement, discuss your financial situation with a family law attorney.
Stay Rational
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