A prenuptial agreement can be a dicey topic for a soon-to-be-married couple. It carries a stigma of undermining the permanence of marriage. But getting a prenup doesn’t mean you’re planning your divorce along with your wedding. It is an excellent way to get on the same page with your future spouse on important issues.
What is a Prenuptial Agreement?
A prenuptial agreement is a contract between future spouses on the division of assets in the event of divorce. It can also cover ancillary items, such as the education and religious instruction of the couple’s children.
How Does a Prenuptial Agreement Affect Divorce?
A prenup lets a couple decide ahead of time how their property gets divided in a divorce. Without a prenup, divorce judges and state laws determine who gets what. Thus, it can be a guessing game as to what you will walk away from your marriage with.
Different states have vastly different laws governing the divorce process. New York, for instance, gives a lot of leeway to judges to divide assets. The courts are instructed to divvy up property in a way that is fair and equitable based on individual circumstances. California, by contrast, splits all assets accumulated during the marriage fifty-fifty.
A prenuptial agreement takes these decisions out of the hands of the state and the judges. It lets couples come to an upfront agreement and get on the same page.
What Does a Prenuptial Agreement Cover?
A prenuptial agreement can cover almost anything not specifically excluded by the public policy. Some of the most common items found in prenups are as follows:
- The division of wealth accumulated by each partner before the marriage.
- The treatment of real estate and other assets owned by each partner before the marriage.
- The property interests of either spouse’s children from previous marriages.
- Alimony or spousal support.
- How children from the marriage will be educated (for instance, public vs. private school) or instructed on religious matters.
- Who handles the debt each partner brings into the marriage, or that which the couple accumulates together.
- Inheritance matters in the event of one spouse’s death.
- Who receives the benefits from each spouse’s life or disability insurance policies.
An attorney can evaluate your finances and those of your future spouse. This enables them to advise you on which items your prenuptial agreement should include.
What Does a Prenuptial Agreement not Cover?
There are certain items you cannot stipulate in a prenup. This is due to public policy laws. The courts decide on the following items at the time of divorce:
- Child custody arrangements.
- Child support obligations.
- The right to the marital home.
Who Should get a Prenuptial Agreement?
Are you a good candidate for a prenup? An attorney can advise you based on your unique circumstances. In general, you might consider a prenup if any of the following apply to your impending marriage:
You Have Children From a Previous Marriage
If you are entering a marriage with children of your own, a prenup can protect their interests. For instance, if you have a college fund set up for your kids, you might not want it getting tangled with the finances of your new marriage.
There Is a Significant Wealth Differential Between You and Your Spouse
Think about the money Tiger Woods could have saved with a prenup. Most people reading this are not as wealthy as him. But if you are bringing substantial wealth or assets into a marriage, it makes sense to want to protect them.
If you are not wealthy but your soon-to-be-spouse is, a prenup can also protect you. It can keep you from walking away with nothing if your spouse ends the marriage.
There Is a Significant Debt Differential Between You and Your Spouse
Debt, like wealth, has to be adjudicated in divorce. If one spouse has a lot more of it than the other, you might want to decide up front who is on the hook for it if the marriage dissolves.
The same goes for debt accumulated during the marriage. What if you combine finances, but your partner is the one going on credit card spending sprees? A divorce judge might see that as joint debt and assign half of it to you. A prenup can protect you from that happening.
You Are a Public Figure (Or a Private Figure Who Wants to Stay That Way)
You’ve read the tabloids (or at least glanced at the covers in line at the grocery store). You know there’s nothing they love more than a juicy divorce story. When public figures get divorced, and one partner trashes the other on social media, word travels fast.
A prenuptial agreement can include a confidentiality clause. This forbids each spouse from bad-mouthing the other. It can’t protect every detail of your divorce from entering the public records. But it can keep it from devolving into a he-said-she-said gossip fest.