If you don't want a divorce court to make the final decision about how your assets will be divided, a prenuptial can protect you. Difficult as it may be to talk about money before marriage, doing so can save heartache and hassles in the long run. A prenup can minimize the financial and emotional toll of a divorce. Couples without one will have their assets distributed for them by the state if the marriage ends and they disagree about who should get what.
About one in three of all first marriages ending in divorce...
Without a prenup, assets could end up in the hands of your spouse's children from a previous marriage instead of your own kids, or they could go to a slothful mate who did nothing while you toiled away at a business or book that eventually became a big success. Without a prenup you're letting your financial future be determined by a third party.
A prenup is smart financial planning, legal and financial.
Think of a prenuptial as a business arrangement or as an insurance policy to help remove some of the emotion that's naturally involved. Since marriage is not just an emotional and physical but also a financial union, a prenup and the discussions that go with it can help ensure the financial well-being of the marriage.
A prenuptial accord is a contract between two people about to wed that spells out how assets will be distributed in the event of divorce or death. Such agreements have existed for thousands of years in some form or another, particularly in European and Far Eastern cultures, where royal families have always made provisions for protecting their wealth.
You don't have to be wealthy to need a premarital agreement. Sometimes the most jealously guarded assets are small amounts because of the hard work expended to accumulate them.
You should consider having a prenup if you fall into any of the following categories:
- You have assets such as a home, stock or retirement funds
- Own all or part of a business
- You may be receiving an inheritance
- You have children and/or grandchildren from a previous marriage
- One of you is much wealthier than the other
- One of you will be supporting the other through college
- You have loved ones who need to be taken care of, such as elderly parents
- You have or are pursuing a degree or license in a potentially lucrative profession such as medicine
- You could see a big increase in income because your business is taking off, or that garage band you play in has just gotten a contract with a big record company.
Tips for Approaching the Subject
First, do it as early as possible. The mention of a prenup shouldn't come as a surprise if you and your sweetheart have been open with each other as the relationship became serious. Talk it over before the engagement to express a belief that these agreements are important and that you'd like to discuss.
Second, the discussion must be honest. You have to be candid about why you want the agreement. This topic is not romantic but it's purpose is opening a dialog.