As much as marriage is about love and harmony, it is also a business relationship that comes with its own set of laws and regulations. When two people tie the proverbial knot, their finances, assets, and other money-related matters also become tangled.
One of the ways that individuals can protect each of their financial interests is to obtain a prenuptial agreement. As financial literacy among men and women grows, prenups are becoming more and more popular. However, prenups still come with a few disadvantages, primarily that they seem a bit offensive when concerning what is supposed to be the most important person in your life. As with all things, premarital agreements come with their own set of pros and cons.
If you have proposed or been proposed to by your partner and the two of you are planning to walk down the aisle soon, the question of whether you should get a prenup may be looming in your mind. You definitely need to heed the advice of a family lawyer, but we can get the ball rolling for you. Here’s a look at both sides of the argument, so that you may make an informed decision as to whether it is for you.
First Up: The Pros of Prenuptial Agreements
Protection of Wealth
If you are someone who has a significant amount of wealth, you may want to protect yourself from losing half of them (or more) in case the marriage doesn’t work out. This is more commonly seen in marriages involving an older individual and/or those who are going into their second or subsequent nuptials.
A prenuptial agreement also ensures that spousal support payments do not mount up to massive numbers upon divorce.
Protection for Existing Children
If a person entering the marriage has children or grandchildren from a previous partner, a premarital agreement can protect their inheritance rights.
Protection of Business
A prenuptial agreement will help avoid the splitting of a business or practice that belongs to one of the parties of the marriage in case of a separation. It also protects the interest of the business by preventing it from being handed over to the ex-spouse.
Protection of the Non-Working Spouse
A prenup isn’t always meant to “protect the money”. On the contrary, it ensures that neither partner is taken advantage of or duped during a divorce. One good example is that if one of you decides to give up working to become a homemaker or stay-at-home parent, a prenup ensures that you will be compensated for the sacrifice if you and your spouse decide to split up.
Protection From Debt
If one of the spouses has a significant amount of debt to their name, a premarital agreement can ensure that the debt-free partner is not forced to take on the financial obligations of the other.
Prenups cover more than just the financial aspects of a marriage. There can be a myriad of different areas discussed in it; anything that would involve decision-making and sharing of responsibilities between the spouses which is agreed upon in advance.
Cons of Prenuptial Agreements
Forgoing of Inheritance Rights
Under the law, even if your spouse does not include you in his or her will, you are entitled to a portion of their wealth in the instance of their passing. However, if you had signed a prenup prior to your marriage, you may have agreed to give up this right, and therefore, will get nothing.
Not Being Entitled to the Spouse’s Business
In many states, an increase in the value of the business while one is in a marriage would be considered divisible marital property. However, a prenup may snub you of this even if you have played an active part in the growth and success of your partner’s business or professional practice, either by being actively involved in the day-to-day operations of it or by taking care of the house and kids while your spouse works, you may be snubbed out of getting any portion of it in case of a separation. That is, unless it is specifically stated otherwise.
Bad Start to the Marriage
Discussing things such as death and divorce even before one had said “I do” can be seen as a less-than-romantic start to the relationship, planting a sense of lack of trust between the spouses.
Difficult to Predict
It’s not always easy to predict every future scenario and decide how to handle it years in advance. Often, it can be that either of the spouses ends up agreeing to something that can have a monumental impact in the future just because they are in the “honeymoon” stage of the relationship and don’t want to sully the mood – terms that they would otherwise never entertain!
May Be Forced to Make Lifestyle Changes
A premarital agreement could considerably limit the amount of spousal support that would be paid. Therefore, the spouse who does not work or does not earn as much as the other may end up having to give up the lifestyle that they have gotten used to because they may no longer be able to afford or sustain it.