Protecting Your Assets: A Guide to Prenuptial Agreements
Every marriage hopes to last a lifetime, but some couples may find it difficult to stay true to their vows. When dealing with important matters like these, it is crucial to start with assurance, particularly when it concerns your assets.
A prenuptial agreement, or prenup, is helpful for you and your partner to know what will happen to your assets when your marriage fails and you decide to file for divorce. It’s always important to know what your rights are. It may not sound romantic, but prenup will put your mind at ease whenever you think of the what-ifs.
In this article, learn more about the prenuptial agreement, its purpose, what can and cannot be included, the importance of legal counsel, and why it is important in protecting your assets.
What is a Prenuptial Agreement?
A prenuptial agreement or prenup is a contract binding two people who agree to get married, covering what will happen to the assets of each individual at the time of divorce. It answers many questions, such as “can I borrow from my pension, retirement funds, and business holdings to fund my wedding?” or “Can I reclaim a portion of our shared assets if we get divorced?” It is drawn before the commencement of a civil partnership or marriage.
It aims to clarify financial-related issues and limits of every partner during separation or even death. It resolves the issue of who gets what and how to divide the assets in a manner befitting to what was agreed upon in the drafting of the contract.
Prenups are ruled by the Uniform Premarital and Marital Agreements Act commissioned in 1983 by the National Conference of Commissioners on State Laws. It is a multi-state law adopted by 26 states, bringing consistency to signed contracts by parties who enter into marriage.
The Purpose of the Prenuptial Agreement
Prenups answer common wealth disparity issues of the couples. Such agreements are established when partners want to protect what is theirs to begin with. It signifies respect for the hard work of every party before coming into the marriage.
Additionally, prenups can establish protection for future assets that do not exist at the time of drafting the agreement. This also signifies respect for the hard work of the party who may acquire additional assets at the time of marriage.
It also protects the inheritance of children existing at the time of marriage or children from previous relationships or marriage. The agreement can preserve the assets of those children that can later be transferred as inheritance.
Through prenups, you can also determine the alimony payments or spousal support. Alimony payments are monetary transfers legally mandated from one to another to support them. Plus, you can use your prenuptial agreement as an estate planning tool to protect your goals and interests.
Lastly, prenups can also determine the jurisdiction with which your divorce can be applied. This purpose applies to couples from different countries or when there might be a chance that the laws from another jurisdiction might be heard.
What Can Be Included in the Prenuptial Agreement?
To further elaborate the aims of prenups, here’s a list of what it can cover.
- Properties acquired during the marriage or marital assets.
- Properties acquired before the marriage or separate (individual) assets.
- Rights to properties of children from past marriages or civil partnerships.
- Rights to children for the current marriage or civil partnership.
- Business and family properties
- Property distribution details (even at the time of spouse’s death)
- Estate planning details reinforcing Wills and Trusts.
- Stocks, bonds, dividends, savings, and business interests.
- Retirement funds, rights of life insurance policy, education funds, pensions, income, and other finances.
- Spousal support or alimony
What Can’t Be Included in the Prenuptial Agreement?
These limits can’t be listed or drafted in the prenup:
- Custody of children and agreements for visitations.
- Child support payment agreement.
- Biased or unfair terms.
- Illegal agreements or terms that violate the rights of an individual, public policy, and criminal statute.
- Non-monetary restrictions like prohibiting one from doing or having.
- Verbal agreements
The Importance of Legal Counsel
When considering a prenuptial agreement, it’s important always to have legal counsel at your side. Every party should have at least one. While it’s possible to draft on your own, sometimes it may become unenforceable once the court finds out that certain requirements and terms aren’t met.
Courts always check for the technicality of the agreement. When they see technical errors, inappropriate terms, and coercion, they can invalidate the prenup you drafted. Moreover, some states have complex requirements when filing for a prenup.
The court will see if the prenuptial agreement is fair for both parties whenever a divorce happens. With the help of legal counsel, you can ensure the enforceability of your contract and its validity in the event of divorce or death.
Why Prenup is Important in Protecting Your Assets
The importance of prenuptial agreement to your assets circles around what you wish or desire for your rights and assets fairly and legally. With its absence, your assets will be divided in accordance with the laws of the state, which might go beyond what you want.
Furthermore, with a prenup, you can avoid the tedious, time-consuming, and high-cost legal proceedings in the event of a divorce. It also provides security and transparency for your relationship while openly drafting and discussing the prenup. This agreement builds trust and respect for your spouse’s rights and properties.
While many think that prenuptial agreements are bad for the foundation of relationships, it’s definitely the reverse. Remember, protecting your assets doesn’t mean you lack trust in your partner. It’s about being practical and responsible at the same time. A prenup can give you the insight of respecting your partner’s hard work while eliminating the stress and troubles in the event of divorce.