Do you believe in this statement:
“Prenuptial agreements are reserved for the rich”?
Or perhaps this remark:
“Do you really trust your spouse if you want him/her to sign a prenuptial agreement?”
Or our personal favorite:
“I barely have any money or assets, so I don’t need a prenuptial agreement”.
If you do in fact believe these three aforementioned quoted sentences above, you may have been incorrectly informed as to the true potential effects of prenuptial agreements, commonly referred to as “pre nups”. Let us provide you with a full guide to the truths and lies of prenups.
What is a Prenuptial Agreement?
First and foremost, what exactly is a prenuptial agreement?
Such an agreement is a written contract executed between a soon to be married couple that designates what shall happen to each spouse’s finances and assets during and after the marriage. Pre nups are a neat way of essentially “creating the laws of your marriage” to govern your finances and assets.
To better understand the intricacies of pre nups, let’s play the classic childhood game, 2 truths and a lie:
- Statement 1: Almost all marriages end happily ever after.
- Statement 2: Pre nups can be romantic.
- Statement 3: Pre nups are available to all couples, regardless of their individual or joint income classes.
Did you spot the lie? Here is a closer look into which statements are true and which are false.
Statement 1: “Almost all marriages end happily ever after.” FALSE
We hope you spotted this lie. It is quite common for a marriage to end in divorce. In fact, the CDC estimates that 746, 971 divorces occurred in the US in 2019 alone! But that’s common knowledge because everyone knows that divorces happen all the time!
If you truly believe however that divorces happen all the time, then create a prenup.
A pre nup acts similarly to a “Last Will & Testament” in that it avoids your assets and finances from following state law. If your assets and finances follow state law, then your personal wishes will be disregarded. Thus, avoid the dreaded divorce arguments that will separate you and your ex-spouse more than you need to be and create a pre nup that will handle your divorce for you.
Statement 2: Pre nups can be romantic. TRUTH
Believe it or not, a pre nup can help strengthen your marriage. A pre nup forces you to talk about your finances, your assets, your spouse’s assets, and your individual expectations of the financial aspects of your marriage. Avoid a lack of trust in your relationship, and build communication, transparency, and confidence. What can be more romantic than that? Many engaged couples enter marriage completely oblivious to the laws of marriage, failing to understand important concepts like spousal support, community property, separate property, child support and more. There’s nothing romantic about flying blind, and it certainly doesn’t set your marriage up for success. Be smart, be informed. Now that’s romantic.
Statement 3: Pre nups are available to all couples, regardless of their individual or joint income classes. TRUTH
Yes, it’s true. Pre nups are not just for the rich. Any and every engaged couple could and should have a prenuptial agreement. If you or your spouse don’t necessarily have large assets or a lot of money, that is futile. Pre nups don’t require wealthy couples with immense assets and colossal bank accounts to be effective. If you and your partner are a couple looking to build trust in their relationship, then a prenuptial agreement may be right for you.
For example, a couple of modest means can create a pre nup to plan for the future. If a couple plans to buy a house a few years into their marriage, or perhaps is in line for a new high paying job after school during their marriage, a prenuptial agreement is crucial to handling the division of that large influx of income.
Statement 4: Pre nups are only for the young. FALSE
We see as many older couples, even those starting second or third marriages using this important tool to ensure a successful marriage. In fact, the American Academy of Matrimonial Lawyers even assails, at length, the benefits of premarital contracts for elderly couples. To be sure, with elderly couples, the issues around real estate, spousal support, familial obligations, estate planning and more can be infinitely more complicated. For these reasons and more, we’d argue that elderly couples should think even MORE carefully about utilizing this important tool to insure a healthy, happy and peaceful marriage.
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Share your experiences with us! Tell us about how you created a pre nup and how it affected your marriage. We love to hear success stories from all over the globe.