Path to a happy marriage: prenuptial agreement basics
All people want their marriage to be happy, but unfortunately, the divorce statistics in the US, and around the world for that matter, claim that many of those hoping for a happy ending had a very ugly one. And money may play a rather big role in this outcome.
Save for cases where domestic violence or infidelity are to blame for a divorce, the reason is both spouses wanted something particular from the marriage and received something very different. This leads to disagreements, fights, and as a result, divorce.
Many of those disagreements are over the menial stuff like who has to pay the bills or who should contribute more to the mortgage. These fights could be easily avoided if the newlyweds get a Florida prenuptial agreement and decide everything about money before they say the words at the altar.
What is a prenuptial agreement
A prenuptial agreement or a prenup is a document that is signed between the people who are going to get married and outlines the financial agreements between them. This can include payment of bills and other financial responsibilities as well as drives the wedge between personal and marital property.
The conversation leading up to the signing of this agreement may be tough and uncomfortable, but it’s a good investment in your financial future. Contrary to the popular belief, the ultra-wealthy are not the only ones who can benefit from signing such an agreement. Here are the reasons you may want to have one yourself.
Why do I need a prenup?
Wanting to leave your spouse a pauper after divorce isn’t the reason people are signing prenups. Here are five reasons even couples with median income should consider a prenup agreement.
Protect each other’s assets
No matter how much you protect your premarital assets during a marriage, the odds of them becoming commingled, legally speaking, is rather high. If you store your personal funds in a joint account or use them to make joint purchases, they may become legally commingled. This would mean that they will become divisible upon divorce.
To prevent that, make a statement on your premarital assets that should not be considered under joint ownership. This is especially important for business assets and inheritance.
Protect each other’s businesses
When it comes to businesses and business assets, it may not be possible to divide them in a fair and comfortable fashion. Besides, following an ugly divorce, the spouse that gains control of a part of the other spouse’s business can wreak havoc on their financial life.
To protect yourself from this, make statements regarding the ownership of your business and whether it can be divisible upon separation.
Protect each other from debt
There are types of debt that couples take on together. For instance, mortgage or car lease. These should be paid together and if the couple separates, they should manage the debt together. Then, there are the types of debt that are more personal, the biggest example being student debt.
Should the couple separate, the spouse who doesn’t directly benefit from the student debt will be stuck paying for it. To prevent this, make sure that you state what types of debt will be paid together and state what already existing debts will remain personal.
Protect children from a previous marriage
For people who already have children from previous marriages or out of wedlock children, it’s especially necessary to sign a prenuptial agreement. In the case of divorce, the childless spouse may have a legal claim on the assets that should belong to the children. To make sure this never happens, make sure to outline in your prenup what property and assets should be reserved for the children of one or both of the spouses upon separation.
Protect the stay-at-home parent
Not all spouses contribute money to the family budget — some contribute a lot of their time. If one spouse decide to stay at home to take care of the couple’s children or elderly parents, they’re effectively missing out on career opportunities. In other words, even though they don’t pay a dime, they sacrifice their money-making potential to bring something else to the table.
In this case, it would be necessary to provide the stay-at-home partner with necessary legal protection — attribute a certain portion of jointly owned assets to them or clarify other monetary contributions.
What to include in a prenuptial agreement
Now that you’re more convinced you may need a prenup, here’s what you should add to the document.
Premarital assets and liabilities
Start with listing assets that both of you already have and don’t want them to be a part of the marriage. The same goes for liabilities — debts, etc. These will be handled separately even while you’re married.
Next up is listing children that both spouses may have and outlining what belongs to them in this family and cannot be taken from them upon divorce.
Separate marital assets and liabilities
If you expect to take on debt during the marriage or receive a monetary gift or profit from a business that you want to keep separate, make sure to declare it in the document. This may include getting student debt while married or receiving inheritance.
If your possessions include family heirlooms like jewelry or an ancestral home that you would not want your spouse to take upon divorce, include these in the prenup.
While this is not necessary, you can also include financial responsibilities into the document. Deciding on who walks the dogs on the weekend is probably not going to be legally enforceable, though. Something of a bigger magnitude and involving money is a better candidate for this section.
This can include one spouse covering the bills and the other covering groceries, or one paying for another’s education.
The last bit is specifying how divorce should be handled under different circumstances, for instance awarding penalties for infidelity.