One of the most common things married people argue about is money. Many people are familiar with prenuptial agreements in the context of the rich and famous. However, prenuptial agreements can be prudent for nearly anyone. A prenuptial agreement is a legally binding document establishing who owns what, prior to marriage. They can also be useful for couples who are living together in a long-term relationship and not married.
A good prenuptial agreement will clearly list the assets owned by each party and establish the parties’ intention to keep specified property separate during the relationship. The agreement can also establish that each party may incur separate property debt for which the other party will not be held liable. Be careful with this, however, because under some circumstances, creditors may still be able to seek payment from the other party, despite the agreement.
Below are 10 things you probably didn’t know about prenups and probably should.
- Prepare and be fair. Preparing a prenup allows couples to make rational, fair decisions about how to handle their property and assets during marriage, before anger and resentment cloud their judgment.
- Consult with a lawyer! The law does not allow you to do certain things in a prenuptial agreement. Furthermore, there are legal requirements that must be met under California law, such as giving the other party a specified time to review the agreement and advising the other party to get independent legal advice. If these requirements aren’t met, the agreement may not be enforceable.
- They are good for business. Business owners may want to consider a prenup. If the parties have no prenuptial agreement, the marital community could gain an interest in the business which could be subject to division if the marriage fails.
- Think of the children. If you or your intended spouse has children from another relationship, entering into a prenup can be beneficial to them. The prenuptial agreement could set forth the legal and practical parameters of the stepchild-stepparent relationship and empower your new spouse to care for your children if something were to happen to you.
- They don’t (have to) last forever. Nothing lasts forever and neither does your prenup. It is common for prenups to have a sunset clause, meaning the agreement expires after a certain number of years or gets phased out over time.
- They aren’t set in stone. Couples should regularly review their prenuptial agreements to reflect changes in the relationship and in the family. For example, your agreement may change as the children age and become more independent. Your agreement may need modification if you and your spouse start a business together.
- They can’t do everything. Your agreement cannot deal with every possible issue that might arise during your relationship. For example, you cannot include stipulations to avoid paying child support or restrict child custody.
- Obey the rules. Prenups are a legally binding document, so they cannot attempt to evade or violate the law or perpetuate a fraud against creditors. They also cannot restrict free speech or practice of religion.
- Don’t contemplate divorce. Your prenup cannot set the rules of any future divorce. A judge can void your prenup if they think it encourages divorce. In the event of divorce, the parties may execute a Marital Settlement Agreement, which is entirely different from a prenuptial agreement.
- Don’t make it personal. A prenup is not appropriate to try to regulate your daily life, such as determining which spouse is on dish-duty or where you spend Thanksgiving. Prenups are designed to address individual and marital assets and not the personal challenges in your marriage.
As you discuss solemnizing your relationship, it’s important to talk about finances and decide how you want to handle your individual and marital assets during your relationship. A prenuptial agreement can resolve issues before they arise.