Marriage 101: The Prenuptial Agreement
With half of all marriages in the United States ending in divorce, signing a prenuptial agreement is becoming more and more common among couples planning to get married. Despite the myth, prenuptial agreements are not "just for men". Women are just as likely to bring significant wealth into a marriage -- assets that need to be protected.
When it comes to marriage, you have to be realistic about the possibility of failure.
What Are They?
Prenuptial agreements, also known as prenups, are pre-wedding contracts that outline how assets will be divided in case of divorce or death. A properly drafted prenuptial agreement can help you avoid a costly legal battle. You can minimize the expense and pain of divorce by specifically addressing how you and your spouse will handle child custody, alimony, property rights, outstanding debts, or future assets. Prenups can be as broad or as limited as you and your spouse decide.
Do you need to write a prenuptial agreement before you get married? That depends. If you don't put it in writing, your assets will be divided based on the laws of the state where you reside. For community property states, that means your assets will be equally split between you and your spouse. For equitable distribution states, the court will decide -- a time consuming event for you and your spouse. How would you rather have your assets handled?
Do You Need One?
Are prenuptial agreements romantic? Not quite. Are they necessary? In some cases, yes. Prenups are a valuable way to protect your finances prior to tying the knot.
Here are a few reasons you might need one:
- Your net worth exceeds your fiancé's.
- You own significant assets such as trusts, real estate, or stocks.
- Your career is likely to take off.
- You are currently supporting your fiancé while he is in school.
- You are a partner in a business or firm.
- You have children from a previous marriage.
- You have a higher paying job than your fiancé.
- You will receive a considerable inheritance from immediate family or relatives.
- You own a business.
- You are concerned about the debt your fiancé has accumulated.
What Makes a Prenup Valid?
Four things have to occur to make a prenuptial agreement valid:
- Full Disclosure about your assets and liabilities.
- You have to receive independent counsel.
- The agreement is documented in writing and signed before you get married.
- You must be willing to sign the prenuptial agreement.
You should consult an attorney who is competent in marital and family law. Make sure you are seeking counsel independently from your spouse. In no case should you share a lawyer. There would be a conflict of interest.
Tip: Do not sign a prenuptial agreement the night before you get married. You'll be busy enough without the added stress. Plus it's not legal. Prenups should be written and signed a few months (at best) before your wedding date.
Have your attorney review the prenuptial agreement carefully before you sign it. Remember. Once it's signed, it becomes a binding contract -- and will be very hard to disprove in a court of law.