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You’re happily engaged and busy planning the wedding of your dreams. In the process of wedding planning, you and your partner have discuss finances and the concept of a prenuptial agreement. Both of you want to know more about prenups, and how you can take action to protect yourself and your finances in case things don’t work out. Whether you’re on the requesting or receiving end of a prenup, here’s a guide to everything you need to know about prenuptial agreements.
What Is a Prenup?
A prenuptial agreement, commonly known as a “prenup,” it’s a contract that spouses-to-be made before marriage.“The goal of a prenup is to dictate how certain issues will be resolved should the marriage end in divorce, says Amy Broderick, Attorney at Goldberg Jones. “The most common issues to address in the agreement are financial in nature.”
“How will you divide your savings, retirement, and other assets? Will there be Spousal Support (aka Alimony)? How much support and for how long? Both parties benefit by knowing their rights and obligations before getting married,” says Broderick.
Discussing a prenup might not be the most romantic idea during your engagement, but talking about finances openly with your spouse can actually strengthen your relationship and support good communication in your marriage.
How Do You Decide If You Need a Prenup?
The decision is yours, but any couple that brings personal or business assets to the marriage should consider getting a prenup. Whether you’re a young twosome with little assets or have a inheritance, both types of couples could benefit from a prenuptial agreement.
Broderick explains why, “Many people are of the belief that you only need a prenup if you have a lot of assets and you are marrying someone who does not. The main problem with that line of thinking is that we cannot see into the future. You may make less than your spouse today, and assume that a spousal support award at the time of divorce would be in your favor, but three years from now you could have been promoted several times and your spouse could have been laid off.”
Still not sure if a prenup is for you? Consider the following questions Broderick shared with us, “Do you have now or will you have in the future savings or retirement? Does your fiancée have or will s/he have savings or retirement? Will either of you own a home? Will either of you incur debt during the marriage? Would you like to define the nature and obligation of spousal support? Do you have children and would you like to protect their potential inheritance? If you answered yes to any of these questions, you should get a prenup.”
Why Engaged Couples Should Sign a Prenup?
Both partners should sign a prenup to protect themselves from economic disaster if the marriage takes a turn for the worse. “Prenups are like fire insurance,” says Broderick. “You don’t buy insurance hoping your house burns down…you buy it so that IF your house burns down you can start fresh.”
Another reason to sign a prenup is to protect income and assets acquired during the marriage.
“If both parties are in the relationship for the right reasons, there shouldn’t be any issues signing a prenup,” says Broderick. “If anything, signing a prenup shows both parties that the other person is not entering the marriage for financial gain.”
A prenup is not going to stop a divorce, but it can streamline the process and prevent spouses from financially ruining each other.
4 Tips for Negotiating a Prenup
If a prenup makes sense to you, Attorney Amy Broderick has a few tips to tactfully negotiate with success:
1-Start planning ahead of time. There are a lot of rules surrounding prenuptial agreements that will require you to have a fair amount of time between the drafting of the prenup and the wedding date. Both parties will need time to provide disclosures re: his or her assets and both parties should have at least 10 days to review and consider their options before signing the agreement.
2-Hire a lawyer. These requirements change from state to state, so make sure to have local counsel assist you. Again, prenups have a lot of tricky rules and if they aren’t drafted correctly, they could be found void in a court of law.
3-Chat about your financial information. Both parties will be required to fully disclose their finances (assets and debts) to each other before the prenup can be signed, so any financial skeletons in the closet must come out!
4-Seek separate counsel. Understand that if you want certain provisions in the prenup, both parties may need to seek independent legal advice before signing it.
The material in this article is provided for informational purposes only and does not constitute legal advice.