Besides committing to marriage with your spouse, marriages are increasingly turning into businesses and financial arrangements are crucial. It is therefore very important that all couples consider having a prenuptial agreement with an understanding of your rights under the state law, in case of a divorce. Most people live in the assumption that a prenuptial agreement is only for those individuals with high income, substantial assets and future inheritances, however, this assumption is often misleading and it is advisable for all couples to have this agreement in place regardless of their financial status.
Prenuptial agreement: what is it?
A prenuptial accord is a legal agreement between married individuals that clarify your financial consequences in the event your marriage breaks up.
Although all marriages have a “prenuptial agreement”, known as the “divorce law”, you may not be happy with the manner in which the divorce law works, therefore you may prefer to be in control of your lives, rather than leave the government in control. In such cases, it is vital to have a customized prenuptial agreement.
Why is prenuptial agreement very important?
- Protects you from debts – Couples may bring assets, as well as debts, to a marriage. In case you do not have a prenuptial agreement in place, creditors may use your marital property in settling your debt or that debt of your spouse. However, for you to make sure your spouse’s debts do not spread to you, you can have a prenuptial agreement in place to limit the liability of your partner’s debts.
- Keep your finances separate – Each and every state has its laws on how some kinds of properties, gathered during your marriage, designated as a community or marital property, including those that are under one spouse’s name. In the event that you divorce or one spouse passes away, the community or marital property will be divided between the two of you, either by the court or in accordance to your prenuptial agreement. Therefore, in any case you don’t want to share with your partner part of or all your independently gathered wealth during your marriage, you should consider a prenup.
- Provide for your children from the previous marriages – A premarital agreement is essential when you want to be certain that your children from the prior relationships inherit their rightful portion of your estate. In a premarital agreement, one or both of you can surrender the right to split the other’s assets at death or even in exchange of the amount of property agreed upon.
- Help in settling what one gets if you divorce – With no premarital agreement, state law will determine how your assets will be shared in the event of your divorce. Sometime the state law may dictate a ruling that both of you are uncomfortable with. Therefore, you should use a prenuptial agreement to set your own set of laws for assets sharing and keep away from potential differences when your marriage comes to an end. In addition, you will be avoiding the long and costly divorce case in court of a law.
- It clarifies one’s responsibilities in a marriage – Moreover a prenupt helps in clarifying your responsibilities and those of your partner during the marriage. These may include: who between you to take care of specified household bills, whether or not to file a joint income tax return, agreements about certain projects or purchases, how to solve future differences and so on.
What happens in the absence of a prenuptial agreement?
Without a prenuptial agreement, your state will use its family laws to determine how your assets are handled during and after marriage. Not in all, but in most states your other half is entitled to:
- Receiving a portion of your estate upon passing away.
- Share responsibilities in running or managing assets acquired while you are together.
- Share and get rights of any properties accumulated for the duration of the marriage.
- Contribute to any debts accumulated during the marriage.
All in all there are several valid reasons as to why you should deviate from the state’s family law. For example, if you were a parent from your prior marriages, in the event that you pass away you may desire that your children inherit your estate rather than your current partner. As seen prenuptial agreements can help you meet such desires and more.