We understand that you'd rather discuss your "big day" and its planning than entertain talks on prenups. While restricting your focus to your wedding is alright, you must still face the big elephant in the room.
So, are you prepared to understand that marriages are more than the "blues and flowers"? What happens if the unintended occur?
We say you should prepare ahead!
For that reason, we have gathered a detailed guide about everything you should know about prenups. Here, you will find crucial information on:
- what prenups entail;
- if the agreement is right for you; and
- the cost of the process.
That said, you should know that this resource only covers the basics of prenuptial agreements. You might want to seek your lawyers and state laws for the complex terms and conditions.
In any case, rest assured that a prenup doesn't mean your marriage will end up in shambles. FYI, almost an insignificant percentage of couples with a prenuptial agreement pursue a divorce.
What Is Prenup? Is It The Same As Postnup?
Prenup (short for prenuptial agreement) is a contract engaged couples sign to sort:
- their rights on assets and debts (gathered before and after their marriage); and
- the distribution of the listed assets and liabilities in the event of death or divorce.
Summarily, prenups center on couples' financial affairs and attitudes. More importantly, it helps save partners from the backlash of costly unions when the marriage fails.
Funnily enough, postnups also center around couples' money affairs. So, does that mean postnups and prenups are the same?
No, they are not!
Postnups (short for postnuptial agreements) though similar to prenups are different from the latter. The difference is the timing. How so?
Like the name, prenups happen before marriages. But couples have often missed the window. Some might not even consider it at the time, and hence postnups.
Postnups, unlike prenups, happen during marriages or even after. They often require stricter requirements, depending on the state and the nature of the couple's assets and debts.
Now that we have cleared the air around prenups, are they right for you to start? Do you even merit the conditions suitable for getting prenuptial agreements?
Is Prenup Right For You?
Spoiler alert: that you are tying the knot with the love of your life doesn't necessitate a prenuptial agreement. The chances are that you both didn't even merit the conditions. What conditions?
Wealth Disparities
Since prenups center on money, it is understandable that wealth is one of the determining factors. About that, is there a considerable disparity of wealth between you and your spouse?
If yes, prenup works perfectly. It helps wealthier spouses get reassurance that their partners are not tying knots because of money.
And in most cases, the wealthier spouses are even the ones vying for prenups. In any case, both parties stand to gain from the prenuptial agreement.
Protection Of Inheritance
The chances are that one of the couple, or even both, has claims to an inheritance. And if such is a family and generational right, the owner might want it as non-marital property.
In that case, a prenup will help retain all rights to the said inheritance independently of the marriage. And if the owner of the property wants it to be marital, s/he can put the couple names as joint owners.
In any case, a prenup will clear the air about the ownership deeds in the event of a break. And the couple will avoid spending big on attorneys in the process.
Business Ownership
Besides inheritance, business is another consideration that prenuptial agreements cover. What happens if your marriage soils a family business?
Perhaps family business is with "family." How about partnerships with other people? What about the company you started even before you met your spouse?
In a nutshell, it is best to save face and include your business ownership rights in your prenuptial agreement. Who owns what? And what is the percentage?
Debt Management
In the case of a divorce, the chances are that both parties don't want to share in debt repayment. Or would you pay for a burdensome deficit you didn't accrue even after a bad break?
The situation will even worsen if one of the couples has more debts. So to avoid awful scenes, the non-debtor spouse's best bet is a prenuptial agreement.
With a prenup, repayment of personal or business debts won't harm your marital property or finances. This agreement will be of more help if your spouse spends recklessly.
In the case of premarital debt, you don't need to worry; the partner who incurred it pays.
Stay At Home Parenting
If you or your spouse decided to stay at home, the stay-at-home partner would be at a disadvantage in the event of a divorce. For a starter, s/he had already forgone a chance at career advancement.
And now, unfortunately, a stay-at-home, divorced parent won't have enough to survive. Luckily, couples can avoid such situations with the security provisions of prenuptial agreements.
With a prenup, couples can set up life insurance or annual benefit packages for the stay-at-home partner in the case of divorce. That way, the latter's sacrifices won't amount to waste, but at least a comfortable living.
Previous Marriage Situations
Either you or your partner could have been once married. In that case, you could have experienced the drudgery of divorce and its time-wasting. You probably don't want a repeat of such stress.
Worse case: the ex-partner took advantage of your lack of information at the time and cheated on you for your rights. Then, a prenuptial agreement can assure that such extortion doesn't happen in your new marriage.
Children From Previous Marriages
If you (or your partner) were once married, the chances are that you already have children outside the current marriage. In that case, you might want to handle your property rights in the case of death or divorce.
For a start, you might want to ensure that your private business goes to only children born within the current marriage. Also, you can set up separate protection rights for kids outside your present union.
Either way, prenuptial agreements will help you clear the air.
Note: besides the seven factors that we listed, other conditions warrant a prenup. Check with your attorney!
What Is The Cost Of Prenuptial Agreements?
There is no fixed rate for prenups. Instead, the situation often dictates how much you will pay.
But in any case, the range you can expect is between $1,500 and $10,000.
We understand that $10,000 would seem outrageous. But you should know that such a fee would only be for complex situations. Plus, the attorney you use also contributes to the charges. How so?
Attorneys often charge per hour. So, the more you and your spouse drag the prenup process, the more money you will pay.
And if you drag the process till marriage and after, that means you will be getting a postnup. Unfortunately, postnups are even costlier than prenups.
Bottom line
We hope your marriage doesn't reach a point of a bad break. Even at that, it is best to handle your prenup.
And regardless of what you might have heard, prenups are not taboos or "being pessimistic." On the bright side, they are opportunities to discuss and plan a financially stable marriage and home!