Also known as a prenup, a prenuptial agreement is an agreement to pre-determine the terms of a divorce before you have married. While some people criticize prenuptial agreements as being a bet that you will divorce, in fact drafting a prenuptial agreement is often a good decision, even if you have no doubts about the marriage. Not just for the rich and famous, a prenup is a good idea for many couples.
Regardless of your circumstances at the time of your engagement, a prenup can be useful. Even if you have few assets, you never know what could happen during the course of your marriage. What if one of you gets a high-paying job, wins the lottery, or receives a large inheritance? Often, couples find that their financial picture changes drastically during the course of the marriage. Even though the prenup is signed before you get married, provisions can be included to handle future events such as these. A prenuptial agreement is not just for the division of property but is intended to make negotiations proceed much more smoothly in the event of a divorce.
A prenuptial agreement ensures that both partners receive a fair outcome in the event of a divorce. Even if you are not coming into the marriage with significant assets, there are several very good reasons to agree to a prenuptial.
For example, if one partner enters the marriage with a significant amount of debt, such as student loans, a prenuptial agreement can prevent the other partner from becoming responsible for that debt upon divorce. A prenuptial agreement is also needed if there is a significant difference in potential earning power, or if one of you stands to inherit a significant amount of money or property.
Do you have children from a prior relationship, or plan to stay home to raise any kids you have in the future? A prenuptial agreement can also guide what happens to children from a prior relationship if the marriage ends in divorce. If one partner does not work in order to raise kids, a prenup can ensure the stay-at-home parent is given full credit for their contribution to the family, despite being out of the workforce.
The process of negotiating a prenuptial agreement is a chance for you and your future spouse to learn more about each other. It is an opportunity to discuss finances and other important matters in a mature and rational manner. Even if the prenuptial agreement is never needed, your marriage may be stronger for having gone through the process of drafting it.