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Benefits of a Prenuptial Agreement

on Jun 1, 2017 in Divorce

If you are considering getting married, you should also consider getting a prenuptial agreement, also referred to as a premarital agreement, or, in slang, “a prenup.”  A prenuptial agreement offers many benefits to a couple contemplating marriage.

Can You Really Talk about Anything?

In order to write an effective prenuptial agreement, your family law lawyer will need information on the assets and debts of both parties.  Together, you are going to have to address important questions about your property and wealth.  Particularly for couples with children, questions such as, “Who will get the family beach house?” must be addressed.  Few people enjoy discussing money, wealth, and wealth distribution.  Doing this together before you tie the knot allows you the chance to really learn where both of you stand on these important issues.

Additionally, discussing a prenuptial agreement allows you the chance to discuss what possessions are important to you.   Even items that currently do not have a great deal of financial value today may have value in the future.  And items that will never have financial value may still be priceless to you.  A prenuptial agreement provides assurances you will keep that blanket your nana made, or that postcard your granddad got from President Eisenhower.

Practice Makes Perfect

The number one reason couples fight is due to finances.  Discussing assets and debts in the context of a discussion about a prenuptial agreement is excellent practice for discussing finances in a productive, non-confrontational manner in the future.  While discussing a prenuptial agreement may seem stressful on the front end, once done, studies suggest this puts couples in a better position for future discussions.

Understanding the Dual Purpose of a Prenuptial Agreement

Prenuptial agreements protect each party in the event of a divorce.  The prenuptial agreement specifies what property exists before the marriage starts, as well as identifies the debts of each party.  The agreement dictates the distribution of both assets and debts in the event of a divorce.  But that is not the only function of a prenuptial agreement.  As illustrated in the question above, prenuptial agreements also clearly delineate what will happen to your property in the event of your death.

Considering the Children

A prenuptial agreement is important regardless of whether or not you have children prior to the marriage.  However, particularly in cases where there are children, careful consideration of the allocation of pre-marital assets should occur before the marriage.  This can include, as reference above, the family beach house.  But it also includes deferred compensation accounts, stocks and bonds, treasured family heirlooms, etc.

Taking Advantage of the Moment

In the event you eventually divorce, you and your spouse must come to agreement on the division of assets and debts.  If you cannot agree, the court will make those decisions for you.  Divorce can be a particularly stressful time, even in the best of circumstances.  In the worst cases, you may not be talking to each other at all.

Making fair and reasonable decisions about the distribution of property owned by each of the parties at the beginning of the relationship is often best done at the beginning of the relationship, prior to marriage.  During this time, you are far more likely to want what is best for each other.  You are also far less likely to spend time and energy (not to mention attorney’s fees) fighting about the distribution of assets or debts.  As a general rule, prenuptial agreements take far less time and costs far less money than a protracted divorce.

Protecting Your Business

A premarital agreement can protect your business during a divorce.  Recall, during a divorce proceeding, if you can’t come to an agreement about the division of property, the judge will make the decision for you.  A properly written prenuptial agreement protects a business, preventing division during a divorce.  Additionally, a properly written prenuptial agreement prevents a former spouse from having control or involvement in the business after the divorce.

Recognizing Different Spending Habits and Life Choices

Different people have different spending habits and have made different life choices.  Even if you are now on the same page, past spending habits have consequences.  A prenuptial agreement can protect a spouse that is debt free from having to take on some (or all) of the debt of the other spouse in the event of a divorce.

Addressing Spousal Support

A prenuptial agreement can address spousal support in two ways.  Perhaps, as a couple, you have agreed one spouse will give up a lucrative career.  This might be to relocate, or to raise children, or any other reason.  A prenuptial agreement can provide compensation for that sacrifice in the event the marriage does not last.  On the other side of the coin, in a situation where the couple agrees, a prenuptial agreement can limit the amount of spousal support one spouse would otherwise have to pay the other if a divorce occurs.

Protecting Your Inheritance or Other Substantial Wealth

If you have received an inheritance, or otherwise have substantial wealth, a premarital agreement can protect these assets.  Identifying inheritance and wealth in a prenuptial agreement helps clarify expectations of the parties at the beginning of the marriage.  This may not be a concern to the happy couple.  However, a prenuptial agreement also offers peace of mind to anxious family members.

Protecting Intellectual Property

Perhaps you are currently writing the next Great American Novel.  Maybe you are the lead singer in a band.  Perhaps you have completed some other project prior to the marriage that may eventually increase in value.  A prenuptial agreement can protect your interests in that asset.  Parties often forget about, or even discount, the future potential value of their work.  At the time one is drafting a prenuptial agreement, the prospect for making it big may seem distant, and even silly.  However, a premarital agreement protects the intellectual property of creative types in the event success does happen.

What You Need to Know

In crafting a prenuptial agreement, it is essential both parties are honest about their assets and debts.  Failing to disclose all assets, for example, can result in the court declaring the prenuptial agreement null and void.

 

If You Are Getting Married

If you are getting married, contact Fait & DiLima to discuss your situation.  Our practice focuses on family law matters only.  We can assist you in crafting a prenuptial agreement to meet your needs.