If you think that prenuptial agreements are only for the wealthy or well-off, you would be mistaken. Many individuals who enter marriage may have particular financial stakes that could present complications in the event of a divorce. Some couples may feel that they are jinxing themselves by pre-emptively contemplating what their divorce may look like but going through with this action is not a predictor of future events. This article will cover what a prenuptial agreement is, some of the common reasons for getting one, and what it takes to get one.
What is a Prenuptial Agreement?
A prenuptial agreement is a legally binding contract that establishes how assets will be divided up in the event of a divorce or the death of one of the spouses. It prepares the couple for the unthinkable, or undesirable so that both parties can avoid future financial and emotional headaches. It also protects one spouse from having to incur damage from the other’s debts.
While they are important for individuals who hold significant assets or debts, issues like a prior divorce or having children from a prior marriage ought to justify the effort that goes into creating a prenup.
Prenups do not typically account for assets gained during a marriage, since entering the marriage union signifies that what the couple purchases together is theirs.
Reasons to Get a Prenup
There are several areas of concern that you should take stock of before your marriage so that you can make the right decisions with your prenup. Here are some of the standard areas of concern that couples have before seeking their prenuptial agreement:
- One or both parties hold significant assets before marriage
- One or both parties have a large stake in family assets or a family business
- One or both parties fully and partially own a business
- One or both parties have children from a previous marriage
- In this way, the financial interests of the children can be protected, especially if the parent dies.
- One or both parties have one or multiple prior divorces
- Previously married individuals may find it difficult to marry again without having a clear picture of their financial future.
- One or both parties hold significant debt or plan to incur significant debt
- For example, your prenup can state that no joint/communal assets can be used to pay for the debts of one individual.
- One or both parties is in ownership of intellectual property
How to Get a Prenup
This may sound reductive, but the first step to getting a prenup is open and honest communication. This discussion does not have to be tense — if you can compare the prenup concept to that of an insurance policy you might be able to set your partner at ease. From there you will want to take an inventory of your finances, assets, and liabilities, and consult an attorney. When you have provided your information, a prenuptial agreement attorney will be able to help you determine if a prenuptial agreement is necessary. Going forward, you will draft your financial and marital goals, negotiate, and review the document, and make the agreement official.
Article courtesy of News Anyway