Prenup also called Prenuptial Agreement is a common legal procedure taken between people who are about to be married. Sometimes it is also referred to as premarital agreement.
Prenups are essentially a contract between couples before marriage. This agreement decides how the assets of each party should be distributed in the event of divorce. It can be a good tool in case marriage doesn’t work out.
Prenups cover various types of matters focused on property rights and assets. In addition to this, it also covers the rights of children, spousal support, death, estate planning, and other legal issues, including the division of income earned during the marriage period.
Discussing these topics before getting married helps engaged couples ensure that they are undivided regarding their finances and assets. It explicitly specifies what each person’s property rights will be after the marriage, hence can be of great help in case of divorce.
Who Needs Prenups?
Prenups aren’t just for movie stars or millionaires, anyone can take benefit from it who wants to protect their personal assets if the marriage doesn’t work out. While no one imagines a divorce when they get married but it’s always better to keep backup plans in case something unfortunate happens.
In recent years, prenuptial agreements are gaining popularity. The division of property and money becomes a major issue in most divorce cases. But with prenuptial agreements, everything becomes easy and simple. The cost of the prenup is not fixed, as it depends on both geography and negotiation factor. The more assets you or your partner bring to the table, the longer this will take.
Advantages and Disadvantages of Prenups
Though Prenups can be remarkably useful to protect each spouse’s assets, however, there are some drawbacks to having them. Let’s go through the pros and cons of a prenuptial agreement
Advantages of Prenups Agreement
1. Insurance for Marriage
One of the most prominent pros of a prenup agreement is that it provides protection. It works like insurance for your marriage. Prenups not only protect the assets of spouses but also serve other important functions and can protect family businesses as well.
In the US, nearly half of the married couple end up having a divorce. Couples getting married need to consider that there is always a possibility and they should be prepared for it. Long story short, it can help you prepare for the worst.
2. Divide Your Property on Your Own
In the case of divorce, the division of assets between you and your spouse depends upon the rules and regulations of the state. In a prenup agreement, you can specify how you are going to split your assets to your spouse in case of divorce. Otherwise, it will end up in court procedures, and the judge is likely to decide how to divide your assets.
3. Make Divorce Easier
Sometimes marriage ends up in divorce though no one anticipates divorce. Just in case your marriage does work out, a prenup will make the divorce less complicated and less costly as well.
In the prenup agreement, the division of assets has been negotiated and agreed upon by both parties as well. Some divorce battles turn out to be ugly and also requires large sums of money on legal procedures. But prenups make the divorce process much easier as the potential cause of conflict has been taken care of already.
4. Helps Protect Your Wealth
Prenups provide a great opportunity to settle the major financial concerns before the marriage. Most of the people who are getting married will have savings, investments, and property or other assets.
In case they get divorced, their partner can claim their assets/property, and that’s completely legal. With a prenup, you can determine how your wealth should be split and which will help protect your wealth.
5. Protect your Businesses
A prenup can help protect your business assets as well if you own a business. Prenup also allows you to include your business assets in your prenup agreement.
During the prenup agreement, you can allocate your business as separate property so you won’t have to split it with your spouse during the divorce. It means prenup will protect your business assets from being split between your partners in case of divorce.
6. Other Benefits
A prenuptial agreement not only covers the financial aspects of marriage but also includes children’s rights, spousal rights, spousal maintenance, and many more. It is important to think about the children’s and their lives if the marriage doesn’t work out.
With a prenup agreement, their property rights are protected. Participants can include spousal maintenance in their premarital agreement that specifies how it might be paid in case of divorce or there will be no spousal maintenance.
Disadvantages of Prenups Agreements
1. Not Romantic
Marriage is considered the most romantic time for the couple who are getting married. Despite the reason behind the prenup agreement, asking your partner (soon to be wife/husband) to sign a prenuptial agreement is very unromantic.
It might cause conflict and trust issues over your partner, and sometimes your partner can call off the relationship. It is not something most people want when they are planning their wedding, the most romantic time of their relation.
2. Can Create Trust Issues
A prenup can create distrust in the relationship. Approaching for a prenup is like not having trust in the marriage or the relationship.
This might cause your future spouse to feel insulted or uncomfortable, which will create trust issues. You never know how your partner will react to such a situation and is always full of risk.
3. Don’t Prevent Everything
Though prenups are likely to anticipate every financial issue that might arise during the marriage, however sometimes mistakes and missing information would make a huge difference.
It could complicate the matter if the circumstances shift. After marriage, you may gain some additional assets that you wish to protect, but it is always risky in case you didn’t mention it in the agreement. For this, you have to make sure that the document meets the necessary criteria to be valid and consult a professional attorney.
4. You May Lose Some Entitlements
If you have decided on a prenup agreement, make sure you read all the contact terms very carefully before approving/signing. Not doing so might benefit only your partner, and you will likely lose some benefits.
You should consult the family law attorney to review the agreement. If some terms do not equally benefit both parties, then you must point them and make them corrected.
Prenups cover what will happen to your and your spouse’s assets in the unfortunate event of divorce, separation, or death. It somehow works as insurance for your marriage. However, prenups also create distrust between partners and are not romantic as well, especially when you are about to get married.
If you are planning for a prenup agreement, discuss with your partner whether a prenup is right for you both, and consult a professional attorney.