What is a Prenup?
A prenup is a contract between two partners before marriage. Usually, both parties list out their assets and debts, and then outlines what should happen with these in the event of a divorce. Prenups are essentially used and created for financial protection.
Pros
Financial Discussion with Partner
Discussing a prenup is beneficial as it brings up the topic of finances in the relationship and the expectations. Many people divorce because of disagreements on managing money, so having this discussion before marriage is good as it will set the expectations for the relationship.
Important finances to discuss may be about credit and debt, savings, retirement planning, working vs stay at home, education savings for children, owning vs renting property, as well as payments and expenses.
Reduce Cost of Divorce
Divorce can be very costly, but having a plan for if it does happen can save you both time and money. Divorce attorneys are expensive, so less time with an attorney will save you a lot of money.
High Asset Divorce Protection
Many people come into a relationship with a high number of assets and net-worth. Setting the terms for asset division will protect your separate property you had before the marriage, as well as your family heirlooms. Your children can also be protected in the way that their inheritances won’t be taken away from them in the case of a divorce or death of a parent.
Your business may also be protected, and knowing the future of it, no matter the outcome of the marriage, is a relief for business owners.
Prevent Debt From Transferring
During divorce, debt that is acquired during marriage, is usually divided between the two spouses. A prenup can protect you from paying certain debts that come about during marriage.
For example, your spouse wanted to get a house for their parents. Your prenup stated that any mortgage debt accrued regarding the house is their responsibility to pay off if you divorce.
Cons
Prenup May Not be Fully Equal
Make sure to hire an attorney to review the prenup, to ensure it is fair for you, before you sign it. Even if you think it does not matter because you won’t get a divorce, it just may matter in the future, which you can’t predict.
Need to Talk About Divorce Before Marriage
Getting married is an exciting time for couples. Bringing up the topic of prenups and potential of divorce may bring down the excitement, as divorce is an upsetting topic and thought to have.
Make sure you bring up the topic of prenups long before your wedding, as a prenup that was signed under pressure before your wedding ceremony may be invalid.
Negative Suggestions/ Connotations
Prenups have a negative connotation attached to them. Some people believe it’s a good safety net, while others may believe that it’s a sign of distrust that the relationship will work out.
Usually that is not the case, as couples will see, during the process of drafting a prenup, it actually makes the relationship stronger and more secure as the topics of finances are discussed.
