A prenuptial agreement, or a prenup, is a written agreement made and executed before a couple marries outlining asset distribution in the event of divorce or death. A prenup can also spell out how your property will be disposed of if either party dies, allocate financial responsibility during the marriage, and discuss how potential disputes would be resolved in the event they arise.
You may be thinking, “Prenuptial agreements are only for the wealthy, so I don’t need one.” Nothing could be farther from the truth. There are many reasons why a couple who is just starting out or doesn’t have a lot of property or assets at the time of the union should still have a prenup in place. I discuss these issues at greater length in my book, “The Pre-Marital Planner: Your Complete Legal Guide to a Perfect Marriage.”
If you own a business, own real estate, have received or may receive in the future an inheritance or gift, earn much more than your partner, have a net worth much higher than your partner’s, have children from a previous relationship, have elderly parents who are dependent on you for financial support, have accumulated or your partner has accumulated a significant amount of pre-marital debt, or want to leave assets to other individuals and not only your spouse, a prenuptial agreement is right for you.
Despite their increasing popularity and widespread use today, prenuptial agreements are nothing new and were common among European royalty. Historical records suggest prenuptial agreements date as far back as ancient Egypt when families negotiated these agreements on behalf of their children. Thankfully, 21st century couples are free to do their own negotiating and take control of their financial future.
Because marriage is both an emotional and economic arrangement, raising the issue of a prenuptial agreement, although unpleasant, opens the lines of communication between a couple, helping them to build a more solid foundation for their relationship. By getting couples to think in advance about how they would resolve potential issues regarding property ownership, debt resolution, the division of business interests, and spousal support, a prenuptial agreement puts couples in a better position to make informed monetary decisions in the present.
Although you are entering into a financial agreement, that agreement should reflect the spirit of your relationship. I have seen many engagements fall apart as a result of disputes concerning the prenuptial agreement. When discussing the terms of your prenup, it is of paramount importance to be sensitive to your partner’s needs, regardless of which one of you requested the agreement. Be careful the way in which you discuss unresolved issues. If the terms don’t seem equitable or fair, continue negotiating until they do.
Due to its complexity, you cannot create a prenuptial agreement overnight. Laws vary from state to state, and you and your spouse need adequate time to acquaint yourself with yours. I recommend beginning the process at least six months before the scheduled wedding date. In some states, prenuptial agreements signed on the wedding day, or a few days before it, have been found invalid, either in part or in full.
To create a fair and binding, prenup, you must follow several procedures. Each party should have a lawyer, which is a requirement in most states. Each of you should be clear with your attorney how you want to handle the prenuptial agreement and its negotiations. And each lawyer should be able to explain the document to the two of you so that you understand its terms.
Before executing a prenuptial agreement, most states require couples complete an accurate, full, and fair disclosure of all income, assets, and liabilities. In other words, the document and procedure are not biased, and one party is not unduly burdened, coerced, or forced into entering the agreement.
Already married? Consider creating a postnuptial agreement, which is similar to a prenuptial agreement except you sign this document after the wedding. The procedure for creating a postnuptial agreement is akin to the ones outlined above, beginning with you and your spouse hiring separate attorneys. After all, it is never too late to think about the future. That is, until the future becomes the present.
Photo credit: Ryan Smith Photography Bride and groom sunset silhouette via photopin (license)
Vikki Ziegler is the star of Bravo TV’s Untying the Knot, the founder and CEO of DivorceDating, Author of The Pre-Marital Planner: Your Complete Legal Guide to a Perfect Marriage, and a co-founder of and partner at Ziegler & Zemsky, LLC. To learn more about Vikki, visit www.vikkiziegler.com or follow her on Twitter and Facebook.