Perhaps you’re wondering whether to move forward with a prenuptial agreement. Many people mistake the contract as a legal tool for only the wealthy.
However, you needn’t be rich or famous to benefit from a prenuptial agreement. With the most recent numbers from a National Center for Health Statistics study placing the US divorce rate at nearly 35%, it’s evident that no one is immune from a highly contentious divorce. The following is an outline of the various pros and cons of prenuptial agreements.
The Pros of Using a Prenup
Insurance for your marriage
First and foremost, signing a prenuptial agreement can be considered a form of marriage insurance. You’re protecting your present and future assets much in the same way car or health insurance policies cover injuries or damages.
Protect your property and finances
Prenups all you the opportunity to settle any major financial concerns before the marriage. If you’re a business owner, a prenup will protect your business from being split between you and your (potential) ex-spouse. This will help you avoid costly litigation fees in the event of a divorce.
Additionally, any financial or property assets you have acquired before the marriage can be protected and designated as separate from community property. This extends to spousal debt as well and can help safeguard you from taking on financial responsibility for debts that don’t belong to you.
Lay the groundwork for a supportive relationship
While some may consider discussing prenuptial agreements as a sign of a lack of trust, in reality this topic can help couples practice communicating and negotiating important issues in a relationship. There are few issues more important to a stable marriage than finances.
For instance, if one party has children from a previous marriage, a prenup affords you the opportunity to discuss how to safeguard the inheritance of that child. You can also ensure how one spouse might help provide for the other if they happen to be going through college or some other professional school.
Depending on the laws of your state, your agreement could still be overturned in court. Be sure to check your local statutes for the most accurate information.
The Cons of Using a Prenup
It isn’t a one-size-fits-all solution
Not every marital situation will call for a prenuptial agreement. You’ll have to consider your specific circumstances before signing one. If for some reason you feel that you’re being coerced into agreeing to a prenup — don’t sign. Discuss the topic extensively with your spouse, and ensure that it’s the right solution to your unique relationship.
You may forfeit entitlements
A prenup can prevent you from being entitled to a rightful portion of your spouse’s estate or inheritance. Certain provisions of a prenuptial agreement may also bar you from a rightful share of the increased value of your spouse’s business even if you helped contribute to that growth in value.
They cannot prevent everything
No prenup can anticipate every potential financial issue that might arise throughout a marriage, and it could end up complicating matters if circumstances change. It’s important to revisit your prenuptial agreement whenever your marriage achieves a new milestone — be it an increase in salary, acquiring property, or the birth of a child.