While most people enter marriage based on love, it also becomes a financial partnership that needs ongoing care.
A prenuptial agreement sets the foundation for your financial partnership and helps a couple manage concerns more easily in the event of divorce. A lot of couples also find it beneficial to have these types of difficult conversations before entering into the marriage as it can build a foundation for success in handling future financial issues as they arise during the marriage.
Reasons for a prenup
You may find a prenuptial agreement useful if there is an asset one of you wishes to keep out of your marriage, if you anticipate receiving an inheritance, have an interest in a family business or if there is a considerable disparity between you and your intended in terms of income and assets. Prenuptial agreements are also common where one or both future spouses has children from a previous relationship and wants to preserve assets for their children.
Prepare in advance
If the two of you decide to sign a prenuptial agreement, you should not wait until the wedding date is imminent. If you want the agreement to stand up in court, you must prepare it within a reasonable timeframe. Otherwise, it may appear that you coerced your future spouse into signing an agreement that could tilt in your favor.
Assets and debts
Depending on your financial circumstances or those of your future spouse, the subject of creditors may make prenup preparation a sound idea. The prenup should clearly identify what assets belong to whom and who is responsible for certain debts. One spouse is usually not held responsible for a debt; the other takes on solely in his or her name prior to the marriage. However, once you marry, you will own certain assets jointly, which could provide a creditor with an alternate path to payment. A prenuptial agreement can provide protection, but it must be carefully drafted.
The view of the court
Both of you should have independent legal guidance in developing the prenup, which must contain full disclosure about your separate financial situations, and must be fair and reasonable at the time you enter into the agreement as well as in the future if divorce becomes necessary. If one day you and your spouse should decide to divorce, the court will focus on the terms of the prenuptial agreement and you want to ensure that a judge will have no reason to doubt its validity.