Is A Prenup Right For You?

Just the phrase “prenuptial agreement” makes some people cringe, while others are ready and eager to sign one. So what exactly is a prenup? To break it down, the “pre” in prenup references the binding agreement prospective spouses agree upon before the marriage or “nuptial” takes place. A prenuptial agreement allows both parties the chance to discuss, and then legally set in a contract, what will happen to income and other assets if the marriage should end in separation, divorce, or death.

No one ever wants to have to think about the possibility of unhappily ever after, but it can happen. While discussing such matters isn’t necessarily the most romantic thing in the world, it does provide a sense of relief for many people who decide to go that route. It’s recommended the subject be touched upon as early as possible, so any issues are out in the open even before a couple becomes engaged.

Do You Need A Prenuptial Agreement?

Prenuptial agreements aren’t necessarily the best idea for everyone, nor are they needed in many cases. So how do you know if it’s the right path for you and your spouse-to-be? Consider some of the following when making that decision:

•  You have assets such as a home, stock or retirement funds
• You have your own business or are part owner in one * One of you is much more financially stable than the other
•  You will one day receive money from an inheritance
• You have children from a previous marriage, or with someone else
•  You have loved ones who need extended care (for example, a mentally or physically challenged child/sibling/parent)
•  One of you is supporting the other through college
•  The possibility of a large income increase is in your future (for example, if you are planning on starting a business or writing a book)

If you and your mate decide a prenup is the best way to go, sit down and try to draw out a plan before meeting with a lawyer. You should have a general idea of your assets and what you would like the contract to say before shelling out those legal fees at roughly $300 an hour.

When revealing your assets, it is extremely important to be completely honest. Both you and your partner must disclose all of your assets. Contracts can be tossed if either person has failed to mention an important asset. In addition to this, both parties should be represented legally. Prenups are not valid if one person does not have legal representation (you can’t just scribble a note out on a piece of scrap paper, sign it, and consider it valid).

 Here are a few other points to consider when drawing up a prenup:

•  Understand your spouse’s will cannot take the place of the prenup if the will is of less value. A will however can be more generous than a prenup and leave the widow(er) more than what was agreed upon before marriage.
•  Understand you cannot waive the responsibility of child support payments.
•  Use matrimonial lawyers who specialize in prenups and the laws of the state you’ll be living in.
• Make sure the prenup agreement is in writing and that the document signing is witnessed by a lawyer. It’s highly recommended that both parties as well as an independent lawyer or CPA hold copies of the contract, or that copies are locked in a safety deposit box.

Include A Time Limit

When agreeing upon a contract like this, consider if either of you would be interested in including a sunset clause. This puts an expiration date of sorts on the validity of your agreement. You can decide the prenup will expire in ten years, twenty, or any other amount of time you choose.

As difficult as it may seem to have to bring up such a touchy subject to the person you’d like to spend the rest of your life with, doing so can save you both from some hassle if things go sour. In the event of divorce, the state will have to step in if you and your spouse can’t agree on who gets what. Can you imagine your hard-earned savings going to your spouse’s children from another marriage? This is just an example, of course.

Writing up such an agreement is a decision that only you and your companion can make. It is a personal choice, and the pros and cons should be weighed heavily. However, a prenuptial agreement may prevent a great deal of anguish in the end.