While caught up in the excitement of planning for an approaching wedding, many people forget to take a realistic look at their potential personal financial consequences if their relationship turns sour in the future. As unlikely as it seems now, statistics show that one of three first marriages end in divorce, while more than half of second and third marriages eventually fail. More and more couples seriously consider pre-nuptial agreements to safeguard their financial circumstances. These are not just for the wealthy!
- You are pursuing a degree that will lead to a potentially lucrative career
- You own property
- You may receive an inheritance
- You have significant debt
- You own a business
- You have children from a previous marriage
- You may have to care for parents or grandparents
- You have a pension plan or significant retirement savings
Some couples have a difficult time approaching the subject of pre-nuptial agreements, fearing that the stark realities of finances will interfere with the romance of the coming union. While this can be the case, for many, putting current and future finances into a legally binding document is a relief. It removes the worry and anxiety that dealing with money matters often brings. Rather than facing a future of unknowns, at least this aspect of the future is taken care of.
One of the big advantages of a pre-nuptial agreement is that everything concerning finance is crystal clear from the very beginning. Both of the partners must make a full disclosure of their current financial situations. There will be no surprise tax liens, hidden bank accounts or debts; everything will be revealed. This honest approach makes many relationships stronger.
In order to create a binding pre-nuptial agreement, both parties must have their own attorneys looking out for their best interests. The whole point of pre-nuptial agreements is to protect both partners and having your own attorney is an essential part of that. Remember, terms in the pre-nuptial agreement can be changed over the years with both partners being represented legally for this to occur. If 15 years down the road you are still together, you may change some of the terms to be more generous to your partner.
While working on a pre-nuptial agreement, many couples form common goals for their economic future. Rather than shying away from discussions about careers and money, creating a pre-nuptial agreement focuses both partners’ attention on these sometimes difficult to talk about yet so important aspects of a life together. What better way to face the future than with your eyes wide open, both of you honestly working on a common goal?
Pre-nuptial agreements ease the path during a divorce or on the death of a partner. Non-marital assets are clearly defined and designated in the agreement, avoiding unnecessary emotional upheavals during a divorce or death. Family heirlooms remain in their respective families, something that all too frequently does not happen today if couples don’t have an agreement. That beautiful antique ring from great-grandma will stay with your relatives if you designate that, rather than passing into your ex-spouse’s family.
The matter of a pre-nuptial agreement should be decided early in the engagement, well before the marriage date. This agreement represents an open, honest start to a marriage and guarantees that finances will not be shrouded in mystery and anxiety.