Engaged couples may need to engage in a conversation about their financial goals, their assets, and debts and what should happen if they ever end their marriage or die. A prenuptial agreement is an important tool for financial and divorce planning.
Prenuptial agreements
A prenuptial agreement is a written contract entered before marriage. The couple sets forth their rights and responsibilities concerning their premarital assets and debts and what would transpire if they ever divorce or die. It gives the spouses the opportunity to design their own settlement instead of having one being imposed upon them by a judge and can help prevent an expensive and antagonistic divorce.
A prenuptial agreement may not address child support and custody. Courts consider the best interests of the child when deciding these issues. However, prenuptial agreements are now addressing the pet custody and care.
Prenup circumstances
Prenuptial agreements may have advantages for most couples. But there are specific circumstances that further justify these agreements.
Previously married parties, especially if they underwent a difficult divorce, can enter a prenuptial agreement to avoid the problems that occurred previously. An earlier divorce can also affect rights and obligations under a later decree.
A prenup may also protect the financial interests of children from an earlier relationship. It can keep assets as separate property and allow for the establishment of a living trust or will that address the interests of these children. Prenups can also help assure that a stay-at-home parent in the present marriage receives compensation or assets in return for their sacrifices.
Prenuptial agreements can cover an inheritance received by a spouse. These are sometimes at risk of division if it was commingled with joint assets or spent on a joint asset such as house.
A prenuptial agreement has advantages if one spouse is wealthier. It can help protect their interests and assure that the other spouse is not marrying for money.
A prenup may assure that a spouse is not liable for debts incurred by their partner, even if they were unaware of these liabilities. It may also prohibit the payment of premarital debt incurred by a spouse from marital or joint property.
A prenuptial agreement can protect a spouse’s business and address whether it will be allocated. These agreements may provide assurances to business partners who have concerns over a divorced spouse’s participation. Business valuation methods and whether any interest will be allocated can be addressed.
These agreements should be negotiated well before the wedding date. Each party should also have their own attorney to assure that their rights are protected and that the document is properly executed.