Prenuptial Agreements and Why You May Want One
It is time to talk about the elephant in the room—and that is prenuptial agreements. Overtime prenuptial agreements have unfortunately gotten a bad rap. Some even consider them the ‘beginning to the end’ of a marriage; Que this New York Times opinion piece with the quote, “If you’re thinking about a prenup or — worse yet — your intended is pushing a prenup on you, you might as well go ahead and just cancel the wedding.”
The prenup stigma stops here. More and more millennials are entering marriage with a signed prenuptial agreement. These agreements can be great for many couples, regardless of age, or socioeconomic status. In fact, prenups are less and less being considered an instrument used solely by the uber-wealthy to protect their assets.
There are many reasons that people enter into prenuptial agreements before tying the knot. Below are the prenuptial basics and some reasons why you may want one.
What Can You Agree to in a Prenuptial Agreement?
You can agree to just about anything in a prenuptial agreement. Examples of things you can create provisions for are:
- Alimony and spousal support or a waiver of alimony or support.
- Equitable distribution—who gets what.
- Who gets to stay in the marital home after a divorce, and who is going to pay for it.
- Indemnity clauses and agreements to hold each party harmless from liabilities.
- How finances will be managed in a marriage.
- Circumstances that will render the prenuptial agreement void.
- Selecting beneficiaries of trusts and life insurance policies.
- + more.
What Can You Not Agree to in a Prenuptial Agreement?
The main items that you cannot contract to in a prenuptial agreement are provisions related to children. Any provision regarding children has to be in the child’s best interest and approved by the court. Therefore, provisions in prenuptial agreements that are related to timesharing or child support, cannot be contracted to by the parties.
Why Get a Prenuptial Agreement?
A prenup will help you divide assets when you are in a good place.
Although every couple enters a marriage with the intention of it lasting forever, that is not always the case. Events happen in life that cause us to go different ways and that’s okay. By the time most couples are ready to call it quits there is a high level of anger or resentment present.
These emotions can prevent people from clearly seeing the big picture. Most importantly, they can prevent spouses from remembering that their marital assets were the result of a joint effort. That is why it is better to decide how assets will be divided when a couple is in a good place. This will help minimize the impact of anger, resentment, and avoid spouses from taking everything personally.
An agreement eliminates stress down the road.
There are many benefits in deciding ahead of time exactly how you would like your assets divided. One of many benefits is the elimination of potential stress down the road.
First, prenups give you the opportunity to divide assets in a way that the courts may not. Some people consider going to trial risky; as if you are handing the judge a signed blank check. Without a good attorney, it is hard to know what to expect. However, prenuptial agreements give you control over the outcome of your divorce.
Secondly, prenups also help couples avoid costly litigation at the end of their marriage, as most issues are already decided.
Third, and most important, if people know what to expect in their divorce, they can better prepare for it. This can mean focusing more on the emotional aspect of moving on, and less worrying about financial uncertainty. It may not mean that everything will be perfect, but there will not be a fear of the unknown or unexpected.
A prenup will protect your credit, just in case.
Prenups can not only protect your assets, but they also protect you from debts. Imagine getting married, and thinking you finally found the one. Then imagine finding out that your spouse poorly manages their finances. Down the road, you get divorced and now you’re drowning in their debt, and your credit has plummeted.
This is a very real scenario that happens for many spouses of all ages and all genders. A prenup can prevent this scenario from happening. Couples can agree on how to handle and allocate debts they accumulate during the marriage within their agreement. This can be a huge benefit both during, and after the marriage.
When valuing a business, a prenuptial agreement will help.
One of the most difficult issues people face in divorce is valuing a business. This can be very difficult because there are various factors that play into valuing a business, and they all vary from business to business. This can become very expensive and very frustrating to do during a divorce. If a valuation is improperly established, the decision may end up being appealed. This can add even more litigation costs. To solve this problem, couples can establish a range of business value in their prenuptial agreement. Alternatively, a couple may state terms for how they will value a business they create after they get married. This can save a lot of money on expert testimony and litigation in the future.
When a family business is involved, a prenup will help.
There are many times that one partner in a marriage has an ownership interest in a family business. It can be difficult for future in-laws to be okay with their business ending up in someone else’s hands one day. Therefore, many soon-to-be spouses’ parents may want a say in ownership of their business. They may suggest their son or daughter add provisions to protect any ownership interest in a family business.
The same goes for trusts.
There are also situations where one partner comes into the marriage with a trust set up by their parents. Typically, inheritance is not a marital asset that is to be distributed when a couple divorces. However, if those funds are commingled with other marital assets, they may be considered a marital asset. Defining how the couple intends to use this money or designate this money can be very important. Additionally, it is typical for the creators of the trust to have a say in how the trust money is spent.
If one partner wants to stay at home, a prenup can protect the decision.
Often, one spouse in the marriage may choose to forgo a lucrative career to stay home and raise children. This can prevent the stay at home spouse from accumulating valuable financial assets.
Courts do their best to ensure fairness between couples in divorce. However, typically to even get alimony in Florida, a couple must be married at least 7 years. This may leave the stay-at-home spouse needing to find work outside the home.
That is another important reason for couples to enter into a prenuptial agreement. Spouses can include provisions in the agreement for future support. This can be accomplished by requiring a certain percentage of income to be awarded as spousal support. Couples can also agree on how much income, if any, may be imputed to a stay-at-home spouse. This can be a very useful tool for a spouse who chooses to stay home with children.
Prenuptial agreements are more common because couples are getting married later.
Couples are entering into prenuptial agreements more now than ever before. Experts believe this is because couples are marrying later than they had in the past. In 1965, the average age for getting married was 21 for women and 23 for men. In 2017, the average age for getting married was 29 for women and 30 for men; Which means by the time people get married, they have likely accumulated substantial assets on their own.
When is the Best Time to Sign a Prenup?
You should try to cross a prenuptial agreement off your to-do list as soon as possible. Although they are entered into with good intentions, mixing business and pleasure is always tough. it is better to get it out of the way and focus on the more exciting parts of getting married. If you have a partner that is willing to talk about prenuptial agreements prior to an engagement, that is even better. The sooner you and your soon-to-be spouse can get on the same page regarding marital finances, the better.
It’s About Give and Take
Signing a prenuptial agreement can tell you a lot about the person you are about to marry. This will be the ultimate test of working together in an area of potential conflict. It can become an opportunity to learn about your future spouses’ views on finances.
It is important to be able to put yourself in your partner’s shoes during this time. You may feel that they are asking for a lot. They may fear being left with nothing after giving up a career to stay home with children. You may not want to feel taken advantage of, but they may need a sense of financial security. It takes seeing both partner’s sides to come to a fair agreement.
Prenuptial agreements are often viewed as being one-way agreements, but it does not have to be that way. Prenuptial agreements allow both parties to express their wants and need and feel secure in their decisions.
Tying the knot soon? Reach out to one of our experienced family law attorneys and let us help you figure out the best way to ensure a bright future in your marriage.