Every couple or partnership is unique. What works for one couple may not work for another, and vice versa. Choosing to create a prenuptial agreement is a personal decision that only you and your partner can decide. A prenup can be helpful in many instances and relationship circumstances. However, a prenuptial agreement may not be for everyone! In this article, we’ll break down what a prenup can bring to the table and who it may be best for.
What is a prenup?
A prenup or a “prenuptial” agreement is a contract that is created and signed before a couple gets married. After marriage, a prenup is no longer an option. A prenuptial agreement is intended to detail clear directions about the division of assets if the couple gets divorced in the future.
Although it can be difficult to think of a future divorce before you’re even married, it’s an important method of protection for many couples. While there are many negative stigmas surrounding a prenup, prenups are a wonderful way to force partners to communicate effectively.
What is a Postnup?
A postnup is similar to a prenup, yet not quite the same. A postnup only applies to couples that are already married, while a prenup only applies to couples that are not yet married. The contents of this article pertain to prenups for couples that are engaged and not yet married.
Are Prenups Just for Wealthy People?
It is a common misconception that prenups are only beneficial for wealthy people. However, this is not true. Many everyday, ordinary people choose to sign prenuptial agreements for a variety of reasons. Below, we will outline the many reasons you and your partner may choose to pursue a prenup.
A prenup can include one or multiple clauses. How many and which clauses will depend on your financial situation and personal needs. Many prenuptial agreements include information about alimony, assets for children from a previous marriage, estate planning, pet ownership or custody, debt liability, business ownership, houses, or another real estate, and more.
While these are some of the most discussed parts of a prenup, they are certainly not everything. A prenup can be customized and designed to match the unique needs of your relationship. A prenup can be overly broad or extremely detailed. Some celebrities have had prenups that are as many pages as a short book!
The Benefits of a Prenup (and who should care?)
- Protection from Debt: Debt is a huge burden when entering a relationship. It is often a topic that causes many couples to argue. A prenup can help you and your partner avoid future problems surrounding personal debt. Without a prenup, the burden of debt will be left to the court’s decision.
Who Should Care: If one partner is entering the marriage with significant debt, a prenup can help! This includes various types of debt, like student or personal credit card debt. A prenup will ensure that the financial burden does not get left to the other party. The last thing you want is to get stuck paying for someone else’s charges. A prenup can help you avoid this sticky situation!
- Streamline Divorce: Divorce is hard enough. There are many emotions running high and several stressors to deal with. Preparing for divorce in advance can help make the process run smoother. With decisions already made in advance, you and your partner can split in a more amicable fashion. A prenup also ensures you’ll have the decision-making power to split up assets.
Without a prenup, the decision will be left up to the courts. This could result in a decision that you do not agree with. To ensure everyone’s best interests are protected, a prenup can help outline the division of assets in the event of a divorce.
Who Should Care: Everyone should care about making their own decisions to divide hard-earned assets. However, for couples that are especially worried about the state making decisions on their behalf, a prenup can provide assurance.
- Businesses: Starting a business is an excellent achievement. If one or both partners in the relationship owns a business, a prenuptial agreement can help protect it. A prenup can establish the current value of the business and decide how business interests will be divided. It can also address income and debts associated with the business.
Who Should Care: Anyone with a business should absolutely consider a prenup agreement.
- Kids from Previous Marriage: A prenup can help protect assets that are intended to be passed down to children. If one or both parties entering a marriage have children from a previous marriage, a prenuptial agreement can help clarify things. In the event of a divorce, you can be assured your children will be left what was designated. Without a prenup, the division of assets can be difficult.
Who Should Care: Any couple that has children from a previous marriage should discuss a prenup. This is especially important if you feel strongly about passing down specific items or assets.
- Inheritances: If you anticipate a large inheritance from a family member, a prenup can help ensure it stays separate. This situation can quickly become complicated without a prenup agreement outlining it. This is because money placed in a joint bank account could be considered commingled money, in the eyes of the court. If you want your inheritances protected, a prenup agreement can outline the details.
Who Should Care: It’s not always easy to anticipate inheritances. However, if you expect one, a prenup is worth consideration. It is important also if you want to pass on part of the inheritance to your children.
- Stay at Home Parents: If one party in the marriage plans on being a stay-at-home parent, a prenup can ensure things remain fair. Making the decision to remain a stay-at-home parent to care for the children is certainly a sacrifice, which means one party will not continue to advance their career. In the event of a divorce, this puts that party at a significant disadvantage over the one that remained the breadwinner throughout the marriage.
Developing a prenuptial agreement can help negotiate terms that can quickly become complicated surrounding this issue. This is important in ensuring the children continue to maintain the same quality of life in the event of a divorce. While a prenup cannot determine custody, it can lay out a plan to help with financial support, such as monetary contributions.
Who Should Care: Couples that plan on having children in the marriage or being full-time stay at home parent should discuss this aspect of a prenuptial agreement.
- Communication Between Partners: The benefits of prenup go beyond what will occur in the future (if the couple gets divorced). The process of creating a prenup can bring two parties together before they enter a marriage. When discussing a prenup, a couple will have to discuss and outline their financial goals, debts, and intended spending habits. This can set the stage for expectations and make sure both parties are on the same page.
Having these important financial discussions can help build a solid foundation for your marriage.
Getting a prenup can also help you fight against the stigma. Prenups are not just for celebrities or very wealthy couples. Happy and healthy couples often create prenups as a smart insurance policies.
Who Should Care: Every couple can benefit from a financial discussion before marriage. However, if finances are a sticky topic of conversation in your marriage, it may be of extra benefit.
Create your Prenup Today
If you and your partner have decided to create a prenup, we can help! Once you create an account, we offer an easy-to-use questionnaire and help you negotiate clear terms to outline in your prenup. Our process is streamlined to make creating a prenup as simple as possible!
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