So, you’re getting married – Congratulations!
In addition to all the other wedding plans, you need to add doing a Pre-Nuptial Agreement (also known as a Pre-Marital Agreement).
This seems to be an awkward topic that most people would rather avoid. After all, the two people are in love and trust one another – so the idea of sitting down and drafting a document that would deal with divorce and death seems inappropriate.
It is appropriate and necessary. A pre-nuptial agreement can be viewed as an insurance policy. You may be a good driver and certainly do not intend on causing an accident injuring another person – but – you still have insurance, just in case. That is the value of a pre-nuptial agreement – just in case.
This is of less value for the young couple getting married for the first time. They may each come into the marriage with little in the way of assets. For older couples, who may have worked and accumulated some wealth, and perhaps some real property, this is a must.
While you enter into marriage with the best of hopes, dreams and goals, the statistics show that many of these hopes and dreams are dashed. Many couples, for a variety of reasons, end up in divorce. The legal process involved in separating the assets between the couple are costly – emotionally as well as financially.
A pre-nuptial agreement forces a couple to ask the difficult questions and investigate the reality of each other’s financial situation. Does one of the individuals have more debt than was understood? Does one have more assets? This discussion can eliminate suspicions and worries. It also sets the record straight on how these financial matters will be handled.
A pre-nuptial agreement will give each party a clear snapshot of where the other is financially and legally. It will also set forth the terms and conditions of a division of assets if one becomes necessary in the future.
It can address other important financial issues concerning property. If one individual owns a home and the other will live there – who will pay the mortgage? the utilities? the taxes? the repairs? How are increases and decreases in wealth which were accumulated prior to the marriage to be treated?
In a second marriage situation, the pre-nuptial agreement not only addresses the issue of divorce asset division, but also of the distribution of assets upon death. If you have children from a prior marriage, would you want your wealth to be distributed to them upon your death? Would you want to include the children of your new spouse?
These issues can be resolved in a business like manner – setting forth all of the expectations of the parties. Yes, in a business like manner. Marriage is much like a business – a partnership. If the financial rules and expectations are set down prior to the marriage – it can actually give each individual a peace of mind knowing that this is not subject to chance.
In the unlikely situation that the marriage ends in divorce, the pre-nuptial agreement can shortcut hours of antagonistic litigation and save thousands of dollars.
All individuals looking at an upcoming marriage should discuss a pre-nuptial agreement to protect their assets during the marriage, at their death and in the event of divorce.