What Is a Prenuptial Agreement?
A prenuptial agreement (typically called a premarital agreement, or commonly a “prenup”) is a written contract entered into between two people who are planning to be married. A prenuptial agreement must be in writing and signed by both parties prior to the marriage and does not become effective until the marriage takes place.
Prenuptial agreements are commonly considered to be a tool used by the wealthy to protect their assets and resources from the other spouse in the event of divorce. American culture depicts its use to protect legacies against “gold diggers”. Though that may have been an accurate historical reference, this is a sorely misguided rap for protective financial planning tools to have gotten, especially in modern society. While prenuptial agreements are extremely effective and well sought after by people of substantial wealth, with high and residual incomes, who have significant holdings, or own businesses, the vast majority of people utilizing prenuptial agreements are average Americans, the every day working middle class.
Why should I have a Prenuptial Agreement?
As the average age of marriage continues to rise, people have statistically longer periods of time to accumulate assets independently and come to marriages owning their own home or business. Prenuptial agreements are extremely useful in these circumstances. Prenups are equally as appropriate for people entering into second marriages, often with assets and children, and debt from prior relationships that require special consideration. In this case, prenups can be used to ensure certain assets are distributed to children upon death and do not otherwise pass to the surviving spouse. Prenuptial agreements not only preserve and protect separate property, these documents are useful additions to the vast array of tools people use to responsibly manage their lives.
The terms of a prenuptial agreement can be broad and inclusive of elements as unique as you are. Most generally, they establish rights and retention of assets and personal property in the event of divorce, and sometimes death. A prenup clarifies the financial state and responsibilities of each person entering into the marriage. A prenuptial agreement does not have to be one-sided. These documents are flexible and can be tailored to fit the needs of all parties and can even contain provisions for a less wealthy spouse, providing for specific distributions in the event of divorce from or death of a more wealthy spouse.
Broaching the topic of acquiring a prenuptial agreement will probably never be considered romantic - discussing finances never has been. However, when handled in the right way, the topic can be approached as responsible action on the part of reasonable and forward-thinking adults and open a discussion about assets and debt, income and expenses, contributions to the success of the union and distribution of all of these things in the event the marriage ends, either by divorce or death.
Daren Gum crafts unique premarital agreements that respond to the unique needs of soon-to-be new families. Call him today for a Prenuptial Agreement consultation. He can help you consider and understand all of the elements you may need to consider for such an agreement based on your particular circumstance.