Responsible financial planning includes protecting your assets from unnecessary risk. In addition to safeguarding your finances, a premarital agreement can also be useful in coupling with your estate plan. This may be especially true in the event of a second marriage that comes later in life.
But before we get into the benefits, let’s review what we mean by a prenuptial agreement.
What is a Prenup?
A premarital agreement is a legally binding contract that future spouses use to determine how assets will be divided if unforeseen circumstances occur, such as divorce, or legal separation.
During the length of a marriage, it can become confusing which assets are separate, and what’s shared. Financial concerns are one of the most common sources of relationship conflict, but having an agreement in place before the wedding day draws clear lines, and offers peace of mind.
Here are 5 reasons why you need a prenuptial agreement:
Premarital Agreements for Financial Transparency
Premarital agreements require both individuals to examine the greater financial picture, allowing for conversations about money. Being open about financial matters from the start sets a healthy precedent for future discussions, and increases trust.
Business Owner
In particular, business owners need the protection a premarital agreement provides. If the marriage doesn’t last, the business could end up being divided.
State Laws
States have their own laws governing the division of assets, however, a premarital agreement takes precedence, regardless of where you call home.
Deep in Debt
It’s not uncommon for people to enter a marriage with significant debt from student loans, or credit cards. Without a premarital agreement, you could be vulnerable to your spouse’s financial burdens.
Spousal Support
You can contract around the state’s guidelines for spousal support by specifically terminating the rights to spousal support. Or, designating the amount and duration of any future spousal support. If the prenup addresses spousal support, both sides must be represented by independent attorneys for the terms to be enforceable. Also, be aware, if at the time of enforcement the court deems the spousal support provisions in your agreement are unconscionable, it will not enforce those terms.
Our Premarital Agreement Services
If you were recently engaged, legally planning for worst-case scenarios is probably the last thing on your mind. But a premarital agreement can be reframed as a document that defines your lifelong commitment to each other, including your values and priorities.
For an agreement to be valid in court, both spouses-to-be must have their own legal counsel. To schedule an appointment, please contact our office at (925) 344-5050.