Premarital agreements or “prenups” as they are usually called, conjures up images of ugly divorce proceedings and public humiliation. There is definitely nothing romantic about that especially when your spouse decides to bring it up just as quickly as the engagement was made. However, despite the negative connotations the word brings to many, having a premarital agreement might not always be a bad thing. So when is it necessary to have a premarital agreement and why should you get one in the first place? For starters, a premarital agreement is a contract that is entered into before one gets married or has a civil union. These agreements can contain contents that vary. They can range from provisions of property division to spousal support in the event of a divorce or dissolution of marriage.
Signing a premarital agreement can protect the inheritance rights of offspring – children and grandchildren – from a previous marriage or relationship. Do you own your own business or professional practice? Then signing an agreement protects your interest, that way the business or practice is not divided, and it denies the spouse any ability to gain control of it upon divorce or separation. If a spouse is in huge debt, the agreement allows the debt-free spouse no obligation to assume responsibilities. Premarital agreements sometimes address financial aspects of the marriage. It covers details regarding decision-making and responsibility sharing already established in advance by the couple. Premarital agreements can set limits on how much is spent on spousal support upon divorce. Last but not least, premarital agreements can protect the financial interests of the elderly, those entering into second or more subsequent marriages, and persons with considerable wealth.
However, with the pros are the cons which are unavoidable. Some complications that might arise include: the agreement requiring you to give up rights to inherit your spouse’s estate when he or she dies. According to the law, you are entitled to a portion of the estate despite the spouse not mentioning that provision in the will. Beginning a relationship with a contract that sets up stipulations upon a spouse’s death at this stage can stir up feelings of mistrust. Contributions to the success of your spouse’s business or practice by hosting guests or taking care of the home while they focus on work, does not entitle you to a claim of a share since it wasn’t stated in the initial agreement. In some states, this value increase would be considered marital property.
The most common mistake couples make when it comes to premarital agreements usually take place during the “honeymoon” stage of the relationship. During this time, a spouse might agree to conditions without knowing the full implications, all because he or she believes that their relationship will never get to “that place”. He or she might not be too concerned about financial responsibilities at that point, and unfortunately, when it’s time to settle things during a divorce proceeding, the emotional toil and strain becomes too much to deal with.