A Brief Introduction About a Prenuptial Agreement
Before getting into a marriage, the couple may want to specify the details of their respective assets and how they will be divided after the marriage in the event of a divorce or death. The agreement that is signed between them in such a scenario is known as The Prenuptial Agreement. Irrespective of whether the couple is rich or economical, it is important for them to understand the wide benefits of signing The Prenuptial Agreement.
Thinking ahead in time and planning for something as unfortunate as death or divorce may not be a very comfortable thing to do for a couple before marriage but it is only sensible and mature to have these open discussions before the face of adversity. It goes without saying that such discussions can sometimes get really heated and difficult so if you prefer a third party to mediate, you can easily do that.
Prenup Agreement requires full disclosure by both the parties. Further, it specifies how the assets will be divided. This helps both the parties to understand their rights and feel financially secure. It also reduces the chances of financial conflicts and confusions.
If one person is entering the new marriage with children from the old one, a Prenup can be hugely beneficial as it also spells out the financial rights of the kid. A prenup, in fact, makes sure that the children find financial help even after a breakup or death of his parent.
Other names for The Prenuptial Agreement are Prenup and Premarital Agreement.
Who Takes the Prenuptial Agreement: People Involved
People involved in the Prenuptial Agreement or Prenup are two people who plan to get married. Any couple has the right to opt for such an agreement. The state laws will be the governing laws protecting both the involved parties in the agreement and making the agreement legally binding. Both parties also need to have their attorneys. It is highly advisable to pick the right kind of attorney who can guide each party about the rules, regulations, and laws.
Purpose of a Prenuptial Agreement: Why Do You Need It
The main purpose of a Prenup is used to make sure that the couple knows their financial rights before the marriage, so there are no surprises after divorce or death of a person. It financially secures both the parties. It also protects inherited properties. The couple must specify details of any such property in the agreement and further specify how it will be divided in the event of divorce. In most cases, a person would not like to divide his or her inherited property.
Another very crucial utility of a Prenup is that it makes sure that the one partner who is in more debt doesn’t create losses for another one. Debt obligations should not be a problem in a romantic relationship, and thus, by specifying the details and how that debt will be paid, one partner can avoid obligations that are not his or her. A Prenup also mentions details of day to day finances and expenses, and how they will be paid. With this, both parties know their responsibilities on a daily basis.
Here is the list of reasons why you need Prenuptial Agreement or Prenup –
- To disclose each individual’s respective assets before marriage and maintain financial transparency.
- To give each individual financial safety and legal rights before marriage.
- To sort out the issues of alimony.
- To keep each individual’s debts separate.
- To define how the assets will be divided in the case of a death or divorce.
- To specify the financial responsibilities of each individual.
- To avoid unnecessary financial disputes and confusions.
- To make sure the children are also financially secure.
- It may also protect an individual’s assets from division after marriage.
Contents of a Prenuptial Agreement: Inclusions
A Prenup must include basic details of the couple such as the names, addresses, phone numbers, etc. Further, it is paramount to add the details of their respective properties or assets. At this point, full disclosure is required. Both individuals must be open to specify everything they own to make matters easy and convenient. Then, they should specify how they want their individual property or asset to be divided after a divorce. Both the parties can also agree to keep their respective assets to themselves after a breakup. In a marriage, either one of the partners should be stable and own assets or properties.
Further, A Prenup Agreement must include the details of any debt that an individual carries and how the debt will be repaid after the marriage. In addition, the agreement must include the details about their marital residence and children from a previous marriage if in case they have. It should also add the details of any family business or any other inherited property or assets that any of you wants to keep.
Details such as what belongs to the children, what doesn’t, etc. should be added too.
The agreement must have common clauses and provisions such as confidentiality, governing laws, dispute resolution, etc. It should also have a description of the responsibilities of each spouse and protections of estate plans.
One must note that there are also some things that shouldn’t be included in the agreement, such as details of child custody and waiver of the right to alimony.
How to Draft a Prenuptial Agreement
A Prenup can be drafted by partners whenever they want. However, it is advisable that 60 days before the marriage, they should start drafting it. If both the people find difficulty in describing their finances, they can also take the help of a finance expert. He can create detailed financial statements, check account statements, liabilities, etc.
It is important for any couple to decide what counts as separate property and what counts as marital property. It is only after specifying these important details; they will be able to make further decisions.
Surprisingly, some people nowadays also include details of pet custody, drug testing, prior relationship, etc. For such kind of disclosure and responsibility-sharing to take place, two people have to remain open about it and help in drafting a perfect Prenup.
Here is a stepwise guide on how to draft a Prenup –
- A healthy and open discussion between two individuals before the marriage about their finances and how they plan to divide it is a must to draft a Prenup. They can also take the help of a mediator or attorney.
- Both individuals must be transparent about their assets, debts, and expectations.
- In the case of children from a previous marriage, the parent must specify the expectations and the need for the child’s wellbeing.
- Both the parties must outline each other’s financial responsibilities and then reach a common conclusion to draft in the agreement.
Negotiations are important not only for the wellbeing of everyone involved in the agreement but also to make it legally sound and understandable. Since the agreement is between two people who are expected to have a certain level of understanding and care for each other, it is easy to negotiate and ask for help where it’s needed.
Benefits and Drawbacks of a Prenuptial Agreement
Benefits of the Prenuptial Agreement –
- It preserves inherited assets or properties
- Ensures the wellbeing or financial safety of children from a previous marriage
- Ensures financial stability and conformation for the couple
- Reduces the chances of conflicts because of financial matters
- Specifies the financial responsibilities and expectations before the marriage
Here are a few drawbacks of the Prenup Agreement –
- It doesn’t mention some important issues such as child custody, child support, parenting responsibilities, etc
- Some state laws have a better alternative such as strong divorce laws that include everything requires so Prenup can be unnecessary in those places.
[Also Read: Child Support Agreement]
What Happens in Case of Violation
As long as the Prenuptial Agreement is signed by both the parties willingly, follows state rules(1), and both the parties have their individual lawyers, the agreement stands legally binding and enforceable. In the absence of any of these two conditions, the agreement may not be legally binding. So you must make sure that these conditions are met and in the end, you sign the agreement.
In case of any breach or violation(2), both the parties are well within their rights to approach the courts for settlement. Governing law mentioned in the agreement works as a legal remedy for both parties.
An agreement that makes sure that you remain financially secure even when the marriage doesn’t work, it is an important piece of document in today’s time. However, you must make a comparison between the pros and cons of this agreement before deciding to draft one. The Prenup cost depends on each individual’s case. One must consider taking an attorney’s suggestion on how to draft a valid agreement.