“Wish We Had a Prenup!”
Prenuptial Agreement: Not Just for the Wealthy
While your wedding day often starts “the first day of the rest of your life” the truth is (for better and for worse) life happened before that day, and you have no idea what will happen after it. A prenuptial agreement is a contract entered into by a couple before their marriage that defines what will happen when the marriage ends, whether it be by way of divorce or passing away.
A commonly held misconception about the prenuptial agreement is that such an arrangement is strictly for the rich. However, a prenuptial agreement can also serve to benefit the not so rich, the couple that is equally established, or the youthful soon-to-be newlyweds trying to find their way. Indeed, a national survey from the American Academy of Matrimonial Lawyers (AAML) found that a rising number of Millennials are seeking prenups.
Contrary to the stigma it’s received, a prenuptial agreement should not be a prejudgment about the relationship, but rather should be a conversation about your and your partner’s future – and the sooner you have that conversation with your soon-to-be-spouse, the better. Consider this: A pre-nuptial agreement does not mean you want a divorce; it means you are protecting your family’s future.
Imagine it’s your wedding day. You’re gazing at your spouse as if it were for the first time. You are at the altar with the one you love, and the wedding is exactly how you pictured it; you can see the rest of your lives together as clear as day.
Flash-forward: It’s eight years later. Those blue eyes you were staring into – those were actually non-prescription contacts. The promise your spouse declared never to break – turns out their fingers were crossed. Even though it’s years later, the two of you are still gazing into each other’s eyes, but this time it is from across a big table, and instead of your wedding party, it’s your legal team at your side.
Marriage is an emotional and financial commitment. The hope remains that you will be married forever and do all that you can to work through come what may. Sometimes failing to plan is what contributes to failing, and the opportunity to safeguard and secure both emotions and finances can lift a huge burden from a relationship.
Who should consider getting a prenup? Everyone! While the belief is that a prenuptial agreement is only for the rich, it also suits those who are entering a marriage amidst new business and start-up ventures with little cash or assets. Some of the reasons many young entrepreneurs and those creating new families find prenuptial agreements to be important are to ensure that premarital funds are kept separate from what will be blended marital assets, and/or making certain that should a spouse-to-be pass away, money stays within the family.
Here are some additional benefits of having a prenuptial agreement:
Forces Couples to Have Important Money Conversations Early: Timing is everything. Engaging in the prenuptial agreement process ensures couples are transparent with one another and each has an understanding of the other’s finances before they say “I do.” Discussing these topics early can eliminate unwanted surprise during the marriage, thus giving the now married couple one less thing to worry about.
Equally Protects the Breadwinning Spouse AND the Spouse of Lesser Means: A prenuptial agreement requires the parties to outline their finances at the beginning of the relationship instead of the end. In doing so (at a time when a couple is happy and in love) parties are more inclined to settle on terms that are just and fair to both, as opposed to waging war against one another in an effort to leave the other destitute. In other words, just as a prenup can be used to protect the breadwinning spouse, it can equally be used to protect the spouse who is of lesser means.
Peace of Mind: Going through a divorce can create a lot of questions. What I am going to get? What is he/she going to get? How am I going to support myself during and after the divorce? How much is my life going to change financially? Answering these questions at the beginning of the relationship via a prenup (as opposed to leaving them unknown throughout the marriage or during the potential divorce) can provide each party with the peace of mind in knowing that a lot of these tough, relationship sensitive issues have already been addressed.
Protection: A prenup can protect intellectual property and patents, identify the value of trademarks, and even protect you from any debt your soon-to-be spouse brings into the relationship. Additionally, a prenup can ensure that if a spouse was to quit a job to raise children and/or tend to homemaking duties, any negative financial implications they endure will be supported.
If You Think the Wedding is Expensive, Try Funding a Contentious Divorce! Divorce can cost tens of thousands of dollars. Predetermining all issues relative to finances means less time and expense on litigation (i.e. attorneys’ fees) and more money for you and your spouse to split and use in the creation of two households. If you are a couple that does not have great wealth, then making plans to preserve what you have is paramount.
If the foundation of a relationship is built upon transparency, trust and communication, then putting these ideals down on paper can strengthen the bond.