Prenuptial agreements are becoming increasingly common, and not just for the wealthy. Also referred to as prenup agreements, these written contracts are a smart and proactive way for those entering into a marriage to protect their assets and divvy up responsibilities. Prenup agreements come with a lot of negative connotations, as many view them as unromantic and a sign of distrust. However, prenup agreements can be quite beneficial in that they list how assets, future earnings, and even retirement accounts should be divided if a married couple were to divorce. They can also help with the management of credit card and bank accounts and anything related to future children, such as how their college fund will be set up.
Like it or not, marriage is not simply a romantic relationship, but a type of business. When two people decide to take the next step and get married, they are not only committing to sharing their lives with one another, but also commingling their finances, properties, and other important assets. A prenup agreement can be useful to protect each individual’s financial interests and assets. This is not to say a prenup agreement is right for every couple, but it is beneficial to understand what it entails before making a decision one way or the other. A prenup agreement should be one of those conversations the soon-to-be-married couple has with one another prior to setting a date and moving forward with their union.
What Does a Prenup Entail?
First and foremost, it is important that you understand what, exactly, a prenup includes. The reality is that a prenup can save you a great deal of time, energy, and money because it takes away the need to dispute any division of wealth in the event of a divorce. Here are a few basics about prenups:
- They can define who is responsible for certain financial duties as well as how these matters will be managed and carried out
- If one party has substantial debt, a prenup can protect you from having to take on this debt yourself
- A prenup can be helpful in keeping your finances separate, rather than another aspect of marital property
- They can define what will happen to any money you or your spouse inherits
Is a Prenup Right for Me?
Prenups aren’t for everyone, but there are certain cases in which they will come in handy. Again, they are not only for the rich, but can be used as sound financial planning for anyone. Here are a few considerations to help you determine if a prenup is right for you:
- You have a lot of important, substantial assets, stock, or retirement funds
- There is a large gap in assets between you and your soon-to-be-spouse
- You will be inheriting a large sum of money in the future
- You have children from a previous marriage whom you want to protect financially
- You are predicting a large income increase in the future
- You have family members who you are planning on taking care of financially (this may include elderly parents or other family members)
There are numerous important considerations when looking at the pros and cons of a prenup agreement. To learn more or discuss whether this is the right decision for your upcoming marriage, please contact Atkins & Markoff today.