A Pre-nup? UN-romantic!
Prenuptial agreements can be a delicate, emotional subject to raise with your future spouse. Surprisingly, the conversation often brings couples closer together because it forces the couple to discuss their expectations, fears and needs. When a pre-nuptial agreement has been discussed, negotiated and finalized, the couple begins their new life together without uncertainty about what the future may bring.
Marriage Has a Business Element?
In California, marriage is like going into business – your partner takes on new debt – it is half yours. You earn a millions dollars – your partner gets half. This is called “community property”. If you are a meticulous financial planner and saver while your spouse loves to shop, then community property can seem unfair if you separate.
What’s a Pre-nup, anyway?
A prenuptial agreement is a contract that a couple enters into prior to getting married and establishes how matters will be handled if the couple later separates. A prenuptial agreement usually determines how community property and debt will be divided, whether spousal support will be paid, and anything else the couple wishes to include.
What Sort of Things Can Be Included?
The agreement can provide for “what if” scenarios such as “what if my spouse gets a job in another country and I leave a good job to move?” The agreement may include a “sunset clause” which specifies the termination of the agreement after a number of years of marriage. There are some limitations on what you can include. For example, a prenuptial agreement cannot eliminate nor set child support amounts, child custody or visitation.
Pre-nups are for Millionaires, Right? Wrong!
Traditionally, one spouse enters the marriage with significantly more assets than the other, a prenuptial can help the wealthier party protect his or her assets while assuring the spouse be treated fairly in the event of dissolution.
The truth is that most middle class couples have worked hard to build their assets. There is no faster way to burn through your nest egg than to litigate a divorce. When you have some assets, there is something to fight over. A prenuptial agreement is like an insurance policy – you hope you never need it – but if you do, it saves you a lot of grief and money.
The Fine Print
In California, a pre-nup must be presented more than seven days before the wedding. It must be in writing and signed by both parties with a full disclosure of assets and debts. Both parties must have independent counsel. While one person may wish to waive independent counsel, it is not a good idea. It is important to have a professional explain how the terms of the agreement will impact you.
The Good News
A couple that navigates difficult conversations (where their individual needs may be opposed) and successfully resolves differences, will never need the pre-nup because they approach challenges in a mature and pragmatic way. So, perhaps a pre-nup is romantic after all!
— by Talitha Wegner