When a couple gets married, they are not only uniting two lives as one—they are also uniting everything else, including their finances. This sounds so overly unromantic, but it’s a subject that needs to be discussed as a couple before you get hitched. After all, you will be in it for the long haul, so preparing for the future, including things going wrong, is very important.
So, what does a prenup do, exactly?
In this guide, you’ll find out everything you need to know about this premarital agreement. By the end of this article, you should have a better idea as to whether or not this nuptial agreement is right for you and your future spouse.
A prenup is short for prenuptial agreement, and it’s a contract entered by two people before they get married, which allows them to control certain legal rights within their marriage, especially property rights.
This may sound grim and can even spark feelings of distrust or fear within your prospective spouse, but gone are the days when prenuptial agreements are made solely to protect one person’s assets when there is a large financial disparity between the couple. “It is fairly common to have a prenup nowadays. It’s not just for those who have trust funds,” says Claudette Delacerna, a NYC-based divorce lawyer. A prenup is a customized agreement composed of choices that you and your future spouse will make together to manage your financial assets and responsibilities as individuals and as a couple.
It may seem like a bitter pill to swallow, especially in some cultures, and some will even be insulted by it, so both parties should understand what this nuptial agreement is for. Instead of thinking that your partner is planning for a divorce before getting married, think of it as an act of faith in you and your relationship. You are both laying everything on the table and trusting each other that together you will figure out how to plan for your future.
Maybe one of you, or both of you, has(have) children from a previous marriage and you want to pass on particular possessions to them. Perhaps you are passionate about a charity and would like to make sure that a portion of your savings will be donated to them if something happens to you. If you have a trust fund, you may have an idea of where you would like to allocate the money. Or, maybe you would like to put in writing who will handle the family’s finances and if you need to both agree before making large purchases. If you have a third party whom you would like to manage your financial details, this person can be named in your prenup, too.
It is good to know what you want to put in the contract, but there are many samples that can be downloaded online, if you’re unsure. Of course, you need to modify it according to what you want, but it’s always best to have a lawyer go over and explain the legalities to you. One lawyer can be enough, but you can get individual lawyers for your peace of mind, and to ensure that your interests are protected. Hiring a prenup lawyer is also great if you are looking for further financial advice regarding your premarital assets.
If you’re offered a prenuptial agreement that you are uncomfortable with, you can say no or try to renegotiate the provisions to your liking. It’s only considered valid once the two parties have signed, and the document is notarized.
You may be wondering, “I’m not a celebrity, and I don’t have a lot of premarital assets, so why do we need one?” The answer is, if you don’t have a prenuptial agreement, your state’s laws will determine what happens to your acquired properties during your marriage, if it ends in a divorce or death. The state law may even have a say in what happens to the property you owned before you got married.
“Property regime varies in every state,” Delacerna states. She added, “a prenuptial agreement protects both spouses not only when it comes to financial assets, but also when it comes to liabilities, such as debts.” It can also cover estate planning, incapacity, and death. In addition, prenups can stipulate division of responsibilities, debt separation, and protection for your partner (if you have a business that may incur debt).
A prenup can ensure that you and your fiancé are on the same page when it comes to your financial goals, lifestyle choices, and issues that may arise in your marriage. If this is something you are considering, it’s best to work on it and process it with your lawyers at least six months before the big day, so as to give you and your partner time to review and contemplate the important details.