A prenuptial agreement, sometimes referred to as a “prenup,” is a contractual agreement that protects the parties from unanticipated and undesirable results, should the marriage end in a divorce. The benefits of a prenuptial agreement are many. In a perfect world, a couple entering into marriage will never need to dust off their prenuptial agreement and review the terms as part of a divorce. However, we don’t live in a perfect world. There are any number of reasons couples decide to divorce. If this happens and the couple has a prenuptial agreement, the parties are protected. Whether you are a millennial entering a marriage with significant property or debt, or a person with adult children entering into a second marriage or a small business owner, there are benefits to prenuptial agreements.
1. Protect Yourself from Your Spouse’s Debt
When a couple divorces, the court considers all assets and all debts when dividing property. While you may regard your spouse’s student loans as their personal responsibility, the court may not agree with you. To protect yourself from unexpectedly being saddled with debts your spouse incurred, you need a prenuptial agreement which carefully details who is responsible for what debts.
2. Prepare for the Worst While Hoping for the Best
Of course, very few people enter into marriage thinking the marriage will end badly. However, the sad truth is, marriages can end badly. Hammering out the details of a prenuptial agreement prior to marriage protects each party. While some prenuptial agreements break down along the lines of, “I keep what’s mine and you keep what’s yours,” this doesn’t have to be the case. A prenuptial agreement can include offering a soon to be spouse a portion of a business or other property. Regardless of how the couple decides to divide their assets and debts, a prenuptial agreement details the terms and conditions of each party’s interest in each person’s assets and debts.
3. Discuss Your Finances
Most people do not like talking about money in general. Further, most people are reluctant to discuss their particular financial situation even with those closest to them. A prenuptial agreement must fully detail each party’s financial situation. This forced openness and honesty can make for a stronger relationship. Experts say it also lays the foundation for future financial discussions couples should be having.
4. Protect Valued Heirlooms
Almost everyone has heirlooms or keepsakes that are valuable to them. Perhaps it is a ring handed down from a great grandmother, or an antique submarine clock, or a stamp collection. Regardless of what it is that you treasure, a prenuptial agreement ensures that it stays in your family and is not subject to litigation during divorce proceedings.
5. Provide Your Business Partners Assurances
If you own a business, or if you own a share of a business, the fact that it is yours will not protect it from your spouse during divorce proceedings. In order to ensure your business stays your business and your business only, you can include this in your prenuptial agreement. If, on the other hand, you marry without a prenuptial agreement, your share of the business may be the subject of litigation during a divorce.
6. Consider Your Children
If you have children from a prior relationship, a prenuptial agreement can protect their interests. A prenuptial agreement that details your premarital assets can ensure that your money and other assets are protected. This way, your adult children don’t have to worry about losing their inheritance in a messy divorce. You can also use your prenuptial agreement to detail assets you want your children to have upon your death.
7. Ensure Continued Custody of Pets
While you may view your pet as a part of the family, divorce courts don’t. A pet is just another piece of property which must be granted to one party or the other, as far as the courts are concerned. To make certain you retain ownership of your beloved pets, include them in the prenuptial agreement.
Legal Requirements for a Prenuptial Agreement
Courts will uphold a lawful prenuptial agreement. In order to be lawful, a prenuptial agreement must be in writing and signed by both parties. While not legally required, it is a good idea for each party to have their own attorney review the prenuptial agreement prior to signing it. Prenuptial agreements are not valid if there is fraud, coercion, duress, mistake, incompetence, undue influence, or unconscionability. Put another way, courts will review a prenuptial agreement to determine if the parties were dishonest with each other regarding their finances. They also review prenuptial agreements to determine if they are grossly unfair. Of particular note, a failure to fully disclose one’s financial situation completely is considered an essential part of a fair agreement.
If you are considering marriage, it is a good idea to consider a prenuptial agreement. At Fait & DiLima, our marriage and family law attorneys can assist you in writing a prenuptial agreement that is fair to your soon to be spouse, but also protects your interests. Already married? A postnuptial agreement can also accomplish the goals of a prenuptial agreement. Contact the office today to schedule a consultation to discuss your situation. We look forward to speaking with you at (301) 888-6384.