Prenuptial agreements are a difficult subject to discuss. However, they provide a multitude of benefits that can protect you and your future spouse in the long run. A prenuptial agreement might not be romantic, but it is one of the best ways to protect assets and specify how a marital estate will be divided in the event of a divorce.
While the decision to enter into a prenup is a personal one, there are some unique benefits. Here are several advantages of a prenuptial agreement and the protections that it can provide you.
Keep finances separate
What stays separate during marriage will vary depending on the state so a prenuptial agreement is the best way to avoid having some of your existing property being declared community property once you're married. For example, if you own several homes before you are married, you can state in a prenup that those properties will remain yours in the event of a divorce. Likewise, if you or a future spouse has existing debts when you marry, those liabilities can be kept separate as well.
Provide for existing children
A prenuptial agreement might be essential if you have children from a prior marriage. This is because you'll want to be sure that those children are entitled to their fair share of your property. In a prenup, the new spouse can forfeit rights to a portion of marital property according to a specified arrangement.
Clarify responsibilities during marriage
If you're worried about the division of financial responsibilities after you get married, a prenuptial agreement could be a great way to clarify expectations. A prenup can list out various responsibilities, including:
- How tax returns will be filed during the marriages, such as joint vs. separate returns
- Who will pay certain household bills and how these will be managed
- Whether financial accounts, such as bank, retirement, and credit, will be joint or separate
- How disputes about money during the marriage will be handled
Define separation of assets in a divorce
Speaking of disputes, a prenuptial agreement can help settle the ultimate dispute - who gets what assets if you decide to divorce. Without a prenup, you'll be subject to state law which could divide your assets unfairly. A prenuptial agreement gives you the opportunity to establish your own guidelines for property division and the settlement of many common disputes in a divorce.
Prenuptial agreements tend to have a negative connotation, but their benefits are many. The key to these agreements is to approach them diplomatically and begin the discussions earlier rather than later.
An attorney can help you learn more about the benefits of having a prenuptial agreement and what to include to protect your future.