Prenuptial agreements (or prenups) were once the province of the rich and privileged. They used it as a way to safeguard their wealth in the event a marriage proved to be unsuccessful. The contract specified ownership of various property, including money and investments. If a divorce ensued, the prenup prevented one spouse from plundering the wealth and property accumulated by the other spouse prior to the marriage.
Today, people of average means use prenuptial – or premarital – agreements for a variety of reasons. We’ll cover many of them below. You’ll also learn about the pros and cons of having a prenup, along with details on things such a contract won’t provide. If you’re thinking about creating a premarital agreement for you and your significant other, you’ll find the following information useful.
Common Reasons Marrying Couples Make A Prenup
Marriage and divorce have become increasingly complex over the last 50 years. Men and women entering a marriage have often been married previously, and have children with former spouses. This complicates issues related to property and how wealth is passed down from the couple to their respective children. Additionally, countless state laws have been introduced regarding property, alimony, and the transfer of wealth from one spouse to another following a divorce or death. This too adds a level of complexity.
Prenuptial agreements are used to control how assets are handled following divorce or death. For example, many couples with children from previous marriages create prenups to ensure money and certain pieces of property are left to their kids in the event they die. Without such a contract, the surviving spouse could keep the money and property for himself or herself.
Premarital agreements are also used to minimize acrimony during a divorce. By spelling out which partner receives which assets, there is little to argue about (related to property) if the marriage fails.
Men and women often bring previous debts into their marriages. In some states, creditors can pursue property owned jointly by couples to satisfy the debt obligations of one of the spouses. Some couples create prenuptial contracts to prevent this scenario.
Advantages Of Having A Prenuptial Agreement
There are clearly several benefits to having a prenup created before entering a marriage. Couples can ensure prized heirlooms and other valued property is kept in their respective families. They can also guarantee their children are taken care of in the event one of the spouses die. Prenups can be instrumental in helping spouses avoid a bitter and costly divorce by specifying who receives which assets.
The contracts can also play a key role in estate planning since they help define how property will be transferred after a spouse dies. This can help to ensure businesses owned by one or both spouses can continue to operate without disruption.
Drawbacks Of Having A Prenuptial Agreement
There are, of course, a few disadvantages to having a prenuptial agreement. For example, one of the spouses may perceive the suggestion of a prenup from the other spouse as a sign of distrust. The inference is that a contract is needed because the first spouse may otherwise pursue assets during a divorce that the second spouse wishes to keep. Additionally, the suggestion of a prenup may be seen as a signal that the spouse broaching the topic lacks faith in the marriage’s longevity.
Another downside to prenuptial agreements is that discussing the details to include can cause stress and bad feelings. Many people will find it unpleasant to talk about how property and money will be divided following a divorce. Likewise, they might find discussing debts and alimony to be distasteful.
Deciding If A Prenup Is The Right Option
If one or both spouses are concerned about how their assets will be handled in a divorce, there is good reason to consider creating a prenup. The issues surrounding ownership and the transfer of property are unlikely to go away after a couple gets married. If anything, the issues will become increasingly important.
As a general rule, those who own assets with a significant value, operate a business, or have a sizable retirement account should consider making a prenuptial agreement before getting married. While discussing the specifics may be unpleasant, choosing to avoid doing so could come at an enormous cost down the road.
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Prenuptial Agreements 101: Advantages And Downsides Of Signing A Prenup
