No one wants to enter a marriage already thinking about the exit, but a prenuptial agreement can be a good idea nonetheless. A prenup is a legal agreement entered into by an engaged couple that stipulates how marital assets will be divided in the event of a divorce. These agreements can also specify whether a spouse shall receive alimony, who should have custody of any children or even where the spouses should live after the divorce. It may be unromantic to talk about such issues before a wedding, but a prenup may save a lot of heartache later.
Gives Spouses Control Over Division of Marital Assets
When a couple divorces in the U.S., the laws of the state in which the divorce action was filed dictates how the marital assets will be divided. In community property states, the marital assets are split 50/50 between the parties. In "equitable distribution" states, a judge decides how the assets should be split based upon a variety of factors. Although either alternative may seem objectively fair, both types of laws can produce unfair results. A prenup offers a couple a way of dividing the assets in a manner that seems fair to them. Moreover, with a prenup, the couple can make a decision about property division before emotions cloud their judgment about the type of split that is most just.
Protects Inheritances
Prenups can ensure that any inherited money, property or assets will stay within the family. According to DivorceMag.com, protecting an inheritance is the primary reason middle-aged people with children are likely to enter into a prenuptial agreement. These parties fear that family assets intended to be passed down from generation to generation will end up in the hands of relative strangers instead of with their children. In these circumstances, a prenup can give peace of mind to children or other family members who worry about being effectively disinherited in the event of divorce.
Protects You From Spouse's Debt
When divorcing, marital assets are not the only thing that must be divided: marital debt is divided as well. If one spouse incurred substantial debts before or during the marriage--while starting a new business, for example--in some circumstances, it may be unfair to hold the other spouse partially responsible for the repayment of the debt upon divorce. A prenup can determine who shall be responsible for debts incurred before or during the marriage.
Increases Financial Intimacy
A prenup can actually help start a marriage off on the right foot. When entering into a prenuptial agreement, DivorceMag.com notes that parties must fully disclose their assets and liabilities. Being able to talk honestly about money at the start of a marriage is a good thing. As Nolo.com, the legal website, points out: such open communication can eliminate any misunderstandings or disagreements about money that can arise later.
