Prenuptial Agreement Checklist
A prenuptial agreement allows you and your partner to set the terms of property rights and more for your marriage. Consider these 7 essential reasons to get a prenup. Every prenup needs a thorough review by a prenuptial lawyer; always one lawyer for you and another for your partner.
1. Keep your finances separate
A prenup defines whether the assets you own like your house or car are separate property of one spouse or part of the marital estate.
- If you’re considerably wealthier than your partner, a prenup is a good step towards ensuring that your partner isn’t marrying you for your money.
- If you earn more than your partner, then a prenup can be used to limit the amount of alimony payable in the event of a divorce.
- If you own a business, a spouse can claim a portion of your business’ increase in value or income. Divorce is one of the biggest threats to the stability of your business, so get that squared away in your prenuptial agreement.
2. Establish property rights and distribution
Your state’s laws dictate how the property obtained during your marriage is distributed upon divorce. In the nine states with community property laws, assets will typically be divided between the two parties in an equal split. Under equitable distribution state law, marital property is split in a manner that is considered fair when taking a number of factors into account, such as each partner’s financial contribution to the marriage and their subsequent needs post-divorce.
Some couples might want to avoid having to leave the disposition of their assets up to the courts. With a prenup, you have an agreement already in writing, on what to do with your home and personal property, made long before this potentially contentious period when an agreement might seem impossible. Your prenup can also stipulate the distribution of your property and even life insurance benefits upon the death of one of the partners.
3. Protect one spouse from the other spouses’ debt
Debt is an unfortunate reality of life, and people are bringing their debt into marriage along with furniture and family. That debt isn’t necessarily evenly allocated between the partners, and should there be a divorce, the less-burdened partner doesn’t want to have to pay off creditors, should they target shared marital assets for repayment.
A prenup can help to limit one partner’s exposure to the other’s debt in the case of divorce. Any agreement should outline the separate debts of each partner going into the marriage as well as individual assets; that allows for a clear division between those debts and debts accrued by the couple during the course of the marriage.
4. Protect your family property and estate plan
You may have an heirloom or property that you want to ensure stays within the family in the case of divorce. Having a prenup in place to keep any cherished items separate and apart from your communal marital assets ensures that the fate of your familial property isn’t left up to the court system or state laws.
A prenup can also address any questions of inheritance and ensure that your estate plan is carried out according to your wishes, in conjunction with a will and living trust.
5. Protect your assets in the event of remarriage
Should you decide to get remarried after your divorce, you’ll be faced with a new set of challenges and complications when it comes to determining how to protect your family as well as your property. A second marriage includes all the complications that already come with combining separate lives and adds the possibility of children, child support, and additional assets to be accounted for.
A prenup for a second or (subsequent) marriage should address all of the concerns of an initial marriage as well as addressing concerns arising from obligations from the previous marriage. It can also spell out the distribution of assets in the case of death of one of the partners, to ensure that person’s children get any intended inheritance — again, in conjunction with a will or living trust.
6. Avoid extensive court proceedings in the event of divorce
A divorce is a painful enough process as is, made even more so by a long, drawn-out and expensive legal process that can cost on average $15,000 per person. And trying to come to an agreement on divvying up your assets and property when your negative feelings towards your former partner are at their highest is challenging on the best day.
A prenup signed ahead of your marriage will at least alleviate some of the headache of fighting over your assets and make the process somewhat smoother, if not easier.
7. Openly communicate and prepare yourself for the possibility of divorce
No one wants to enter marriage thinking about the possibility of its failure, but given the oft-cited divorce rates, it’s a reality impossible to ignore. Having that difficult conversation with your partner before you get married about the potential for divorce and finances, allows you to be open and honest with one another, and prepares you for the difficult conversations that are required in any marriage.
When you’re prepared for the possibility that your marriage could end in divorce, you’re being emotionally realistic. You’re also being open with your partner about your financial status, needs and concerns as you enter marriage.
These 7 reasons favor a prenup. Remember, for a prenuptial agreement to be valid, you and your partner will each need independent legal representation.
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