Prenuptial Agreements – Not Just For The Rich & Famous
With wedding season around the corner, we are here to offer the one piece of advice we wish all friends and family would share with the bride and groom before their big day – talk to a lawyer about a prenup. We know, this isn’t the most romantic conversation to have with your partner but it’s a very, very practical one. While you and your partner may ultimately decide not to get a prenup, it’s still a good idea to know what a prenup is and how it can protect you in the event of a divorce.
What Exactly is a Prenup And Why do I Need One?
Essentially, a prenuptial agreement is a legal contract between a couple that sets out how assets are to be divided in the event of a divorce or one’s death. If one party dies the prenuptial agreement will be held in conjunction with their Will. An essential part of any pre-marriage agreement is the production and exchange of financial disclosure. This will include a detailed statement of current assets and liabilities along with supporting documentation to confirm the current value of said assets and liabilities. While the exchange of detailed disclosure is often an exercise that people do not wish to complete, the common law has clearly determined that the more complete the disclosure the more iron clad a contract of this nature will be. Full disclosure is the only way to maximize the validity and enforceability of a prenup. Finally, it’s important to note, if you live with your partner but do not intend to legally marry, you may want to look into a cohabitation agreement which will protect you, much like a prenup, in the event of a relationship breakdown.
Who Needs a Prenup
A common misconception is that prenups are only for the rich and famous. It’s our belief that everyone can benefit from a prenuptial agreement. This is especially true for couples with a wide gap in income or if one partner plans to leave the workforce and stay home to raise children. Another great aspect is that a prenup forces couples to have very important financial conversations prior to walking down the isle. This helps set the financial tone for the duration of the marriage and encourages couples to have frank conversations regarding money before it’s too late.
What is Included in a Prenuptial Agreement
What you decide to include in your prenup is ultimately up the you and your partner. However, here are the most common elements you will see in a prenuptial agreement. First, property. As you may know, any property acquired during the marriage is considered matrimonial property and will likely be divided equally in the event of divorce. This includes property in joint names and separate names. In your prenup you can outline how you wish to divide (or not divide) matrimonial property. Secondly, your business. If you own a business, the best thing you can do to protect this asset is to designate it as separate property in your prenuptial agreement. Finally, the engagement ring. If you wish to keep the ring in the event of a divorce either party can list this asset as separate property.
If you are recently engaged and would like to learn more about a prenup agreement, connect with us to set up an initial consultation.