When I say “prenup” what do you think? Some of you may squirm and say that if someone needs one, then it is not a true marriage because you should be able to completely trust the person whom you are marrying. Many also think that it kills the romance in the marriage because you are in essence “betting against your marriage” from working.
A prenuptial agreement is a contract that you and your spouse sign before you get married (or sometimes you can do this while you are married, but it is most likely best to do so beforehand), and it helps protect your assets separately from each other. It can help protect your earnings, businesses, retirement, benefits, assets and so on. What if you just want to stay safe? Can you honestly say that you trust someone 100%? People change and possibly grow apart with time.
Having a prenuptial agreement forces you and your spouse to talk about money early on, which can be a good thing because it can help prevent some money mistakes that you may have later on in your relationship.
When you are planning a wedding, thinking about a prenuptial agreement might be the very last thing on your mind. However, I’m sure we have all thought or heard about how 50% of new marriages end in divorce. That is a common statistic that is blasted everywhere.
A prenuptial agreement should be thought of as a way to keep yourself safe just in case if something does happen. And if nothing happens, then you are still safe! There really should be no harm in getting one since they are usually simple and can be done with an attorney.
Now, of course different areas and countries may have varying laws regarding divorces and separations, but in general they are at least sort of similar in that if there is no prenuptial agreement, that assets and earnings will be divided. Please consult a lawyer in your area as there are varying laws. If there is no prenuptial agreement, then the marital assets such as savings, bonuses, homes, incomes and retirement savings will be split. Yes, even your retirement accounts.
Times when you should think about having a prenuptial agreement:
1. Your partner has a lot of debt.
This will help protect you if your partner has a lot of debt. If you have a prenuptial agreement, then you will most likely not be responsible for their debt if you separate. Now, you might think “well their debt now becomes mine and I’m fine with that.” But what if they had debt that they did not tell you about and you didn’t find out until after you separated? A prenuptial agreement may protect you in this instance.
2. You are the breadwinner and have much more saved.
This will help separate what you have saved already. A prenuptial agreement can also be used to limit the amount of alimony that your significant other will receive if the two of you separate.
3. You have a business.
If you don’t have a prenuptial agreement, then your ex-spouse could end up owning half of your share of the business which you are a part of. Or if there is significant appreciation in the value of your business, your spouse could end up claiming a portion of this as well.
4. You have assets such as a home.
A prenuptial agreement will help protect you if you have assets as well before the marriage. If there is any appreciation, you might still have to split the difference, but in general a prenuptial agreement will help keep the home in your name.