Prenuptial agreements are rarely in the minds of movie watchers when the beautiful film bride, engulfed in her expensive gown, joyfully gets ready for her big entrance. Imagine the scene if suddenly, the soon-to-be groom and one of his parents or the family attorney knocks at the waiting room door with paperwork in hand. The dreaded prenup.
While prenuptial agreements have been fodder for comedy for decades, Hollywood typically neglects to address the logistics of these types of agreements and how they can be lifesavers.
What Are Pre and Postnuptial Agreements?
Prenuptial and postnuptial agreements are similar in that they are legally binding private contracts between two parties. These types of agreements are designed to help protect assets or income and minimize arguments if a divorce should occur.
A prenuptial agreement is a private contract that sets rules about assets owned by one or both parties. Drafted and signed before the two parties get married, the contract spells out how income and assets should be divided in the event of a divorce. The contract can also specify how income earned as either community or separate income during the marriage or how property may be divided.
Prenuptial Agreement Pros and Cons
A prenuptial agreement that is properly executed can prove to be hugely beneficial. If you have significant assets or income, you can decide how you want it disbursed in the event of a divorce. Similarly, if you own property or anticipate a sizeable windfall during the marriage, you can address how they should be divided in advance. People considering a second or third marriage, particularly when children are a concern, find using a prenup particularly useful. This way, the prenup allows the parents to ensure that their children from previous marriages inherit as directed. They can use the prenup to prevent the new spouse from seizing the children’s inheritance. Without a prenuptial agreement in place, state laws may automatically distribute a portion of your estate to your spouse.
Another benefit to a prenuptial agreement is that it can streamline the divorce process. By addressing issues such as spousal support and who pays legal fees, the end of a marriage—if it comes—is much smoother and less contentious. The agreement can also direct financial consequences if a partner cheats or wastes community assets. The more specific your prenuptial agreement, the better. When detailing an issue like property allocation both parties must make sure that all assets are disclosed fully before signing the prenuptial. While Hollywood (and often, the betrothed) doesn’t consider it romantic, there are many reasons to consider a prenup.
Prenuptial agreements are not for everyone. There are some situations to consider if you are considering a prenuptial agreement:
- The number of your assets – If neither of you have many, it may not benefit you much.
- If there is not a large income discrepancy – A prenuptial agreement may not be necessary.
- If a partner does not want the prenup – Your contract could be nullified if a signature is forced.
If you are comfortable with all your assets after the marriage becoming marital property, a prenup may just be an added and unnecessary expense.
Prenuptial agreements also have limitations. They do not have the power or authority to address the care of children. Custody of minors has to be decided by the court and will not be considered even if it is addressed in the prenup.
In rare cases, courts have found prenuptial agreements invalid. If one party signs the document under duress, a prenup can be nullified. The document must be written and legally valid. Both parties also need an appropriate amount of time to review and sign the document. When utilizing a prenuptial agreement, it is important that you adhere to all legal standards and execute a legally sound and binding agreement.
A postnuptial agreement is very similar to a prenup. It is a private contract between two parties, but it is negotiated and signed after the marriage.
Postnuptial Agreement Pros and Cons
Postnuptial agreements are designed with the same goals as a prenup in mind but are executed after the respective parties are wed. This can complicate matters, as assets are considered marital after the wedding. However, the pros and cons of postnuptial agreements are similar to those of a prenup.
The pros to a postnup include determining how to divide property and assets in the event of divorce and the ability to dictate the distribution to include children from previous relationships. A postnuptial agreement can also be used by couples that are struggling and see divorce as a real possibility in the near future. A postnup can help couples negotiate how they will divide assets and address issues such as spousal support while also trying to work on the marriage.
A postnuptial agreement can be more challenging than its pre-marriage counterpart. A prenuptial agreement is entered into and signed before the marriage and before assets are comingled. Once you become a married couple, state laws will take effect regarding marital and community property. Postnuptial agreements are still better than no contract at all.
While notoriously unromantic, a prenuptial or postnuptial agreement can be an important safeguard in the event of a divorce. Think of it as protecting your future.