With divorce rates at a daunting high, the prenup is becoming a more common appendage to marital unions. Either because people want to protect sizable finances or future inheritances, a prenup becomes a probable reality for couples entering a marriage with a considerable sum of assets (either presently or in the near future). Perhaps you think a prenup is the best option; perhaps your fiancé thinks the prenup is a good option; or perhaps your parents are encouraging a prenup. The question is, though, not whether you want a prenup but whether you need one? Here are our thoughts:
What is a prenup?
There are two types of prenups: a cohabitation agreement and a marriage contract. Usually, such contracts entail details pertaining to the division of property and assets. For those already married, an alternative contract known as the postnuptial agreement is available. From state to state and country to country, legalities pertaining to these contracts and their execution varies. Upon a divorce, it is recommended each party have a lawyer to help with the lawful execution of the contract. The basic requirements for a prenup are that it first and foremost be voluntary by both members of the party, it is done in writing, it contains full or “fair” disclosure of assets and property at the time of the creation of the prenuptial contract, and both members must have the prenuptial agreement acknowledged by a notary public. *By the way: California prenups are particularly intricate.
The Scoop on Prenups.
No longer are prenups as “marital doom and gloom” as they once were. Rather than a contract drawn up by mega millionaires protecting themselves from less than honorable mates (which of course, is probably a sign they shouldn’t marry in the first place: to each his own), nowadays, prenups are becoming more commonly used among older couples who either have already married and divorced, or who have established a career and possibly have children. In this case, a prenup can help elder couples secure (note we didn’t use the word “protect”) assets for respective future heirs or a prenup can help set aside certain assets to help maintain some level of autonomy. And, because high divorce rates do cast an ugly shadow over the prospect of everlasting love, couples who do enter a relationship with considerable assets logically want to have those assets accounted for should fate rear its ugly head.
This of course brings up an awkward but imperative pre-wedding moment for the couple-to-be. At some point, if these thoughts have crossed either of your minds (or your parents) you’re going to want to sit down and discuss the possibility of a prenup. And, we’re sorry to say, there is no easy way to do this. Honesty is always the best possibility and if your relationship is stable and healthy, it should already have a certain level of open, honest communication, which will make talking about prenups a little easier. Though discussing prenups certainly feels like discussing your future divorce, you could approach the conversation from the pragmatic view that a prenup is as much a means to protect each other and your family as to protect yourself. Below are also some potential benefits to the dreaded prenup talk.
Some benefits to Prenups.
Prenups allow you to decide what you want to happen to your cash and assets, like property, should you divorce; this decision is made and agreed upon by both members of the relationship prior to the wedding. This prevents a judge from deciding how the cash is best split up in the future when different opinions about how that money should be divided exists between the two party members. Also, because you’re talking about money, the conversation will naturally lead to talks about financial security and hopefully get you thinking about investments and how to secure finances for your (future) children and retirement plans. Because you have to fully disclose all assets and income (or most, there is a “fair” disclosure clause that gets tricky), a prenup naturally allows for complete financial honesty from both members of the marriage and can encourage you both to respect each other’s contributions and commitments to the marriage. A great foot to start a marriage, we might add.
*Of course, if you’re a single income marriage, there’s no way to avoid making the non-contributing member of the marriage feel insecure since they’ll likely feel that they are the one the assets are being secured from not for.
This is why it is important to decide first and foremost why you want a prenup. Then, you need to decide what you want the prenup to entail and how you want the prenup to split up and or secure existing (not future) assets. Should you run into financial trouble in the future (among the top cause for divorce, by the way) you’ll already have a prenup that will have established groundwork for splitting up initial assets should you two decide to part ways.
One of the most important assets of a prenup is that is naturally encourages honesty, trust, and openness in a relationship. It also implies a certain amount of commitment as the prenup entails what each member of the marriage is “providing” the marriage with. Significantly, these are all important aspects of a marriage that you will have to nurture throughout the marriage and outside of financial matters. Talking about financial issues beforehand can open up cans of worms that could make or break a relationship, but should things go sour, you’ll be glad they did before a marriage. Hopefully, however, the prenup conversation will strengthen the communication and loyalty between the two members and leave you both with a desire to continue working hard to contribute to your marriage’s future.
On a final note, prenups can have a sunset provision inserted into the contract. In general, the role of the sunset provision is to determine the length of the prenuptial agreement whereby after a certain amount of years, the contract expires. In some states, the contract expires upon birth of the first child, at which point if the couple wants to preserve the prenuptial contract they can draw up a postnuptial contract with the same terms. In this way, you can look at a prenup as an extra security step for protecting yourself during the most fragile and shaky time of marriage because presumably, once you make it through the first 5-10 yrs, you should be able to live happily ever after in marital bliss, or something like that.