10 Realistic Reasons to Consider a Prenuptial Agreement Before Saying 'I Do'
By Mark Yatros
Congratulations, you’re engaged! As you plan your wedding and anticipate many happy years together, there’s one more thing to consider: a prenuptial agreement.
Until recent years, prenups were often seen as unromantic protective legal documents for the rich and famous only. Some people thought having a prenup meant that you didn't trust each other. But that’s changed, and more and more couples see them as a smart financial move.
A prenuptial agreement, or prenup, is a legal contract couples sign before marriage. It outlines their rights, duties, and obligations during marriage and in case of separation, divorce, or death.
Prenups can aid couples entering their first marriages and are often even more relevant to second marriages (and beyond).
Here are 10 reasons you may want a prenup signed, sealed, and delivered before you say, “I do!”
1. A prenup can shield the assets you bring into the marriage
Combining assets with your spouse when you marry could result in losing them in a divorce. To protect against losing any assets you bring into the marriage, keep them in your name. You can also state in your prenup that you keep those assets in case of a divorce.
2. You can outline your financial rights and responsibilities
A prenup can set clear expectations for how you’ll manage finances in your marriage. It helps set clear rules for who owns what, how you'll save or spend money, and even how you'll handle everyday expenses. This kind of planning can make life much smoother because both of you know what to expect and agree on it from the start.
A prenup can also address any debt either of you brings into the marriage. You can agree on who is responsible for paying those debts and who keeps any remaining debt should you divorce. This is particularly helpful when one of you brings in significantly more debt, so you aren’t suddenly responsible for debt you didn’t agree to.
3. Prenups can protect children from a previous relationship
A prenuptial agreement can be valuable if you have children and decide to marry. The agreement can ease your children's fears over how your estate will be divided. It also helps give you the security of knowing that your kids will be provided for in the way you intend.
Consider using a trust in remarriage to ensure your spouse is taken care of after you pass away while still guaranteeing your children inherit your assets. Combining a trust with a prenuptial agreement can prevent disputes among family members, lower legal expenses, and bypass court involvement.
4. You can protect the children you may have with your spouse
A prenup isn't just about the couple; it's also about taking care of children you may have in the future, especially when it comes to money. This agreement can ensure kids have what they need, no matter what happens between their parents. It's a promise that the children's financial needs will be a priority.
The prenuptial agreement can also include plans for child support, outlining how you’ll each financially support your kids if you split up. It's not about predicting that you’ll divorce; it's about making sure there's a solid plan in place for the kids' sake.
5. A prenuptial agreement can keep your spouse’s creditors away
If your future spouse has significant debt, you may want to protect your assets from their creditors. This can easily be achieved in a prenup. Your partner must agree to waive any claims to your assets, except if you divorce or die.
You could also consider setting up a trust along with a prenuptial agreement. Any assets put into the trust before you’re married wouldn’t be owned jointly with your spouse and wouldn’t become joint marital property. This means that your spouse's creditors couldn’t claim your assets.
6. You can shelter a future inheritance
If you expect an inheritance, you may want to protect it in your prenup. Inheritances can get sticky because they often represent more than money. They carry emotional significance and family legacy. A prenuptial agreement can safeguard an expected inheritance, clearly stating that it remains separate from marital assets.
This protective measure is crucial if you have children from a previous relationship. A prenup can ensure that the entire inheritance you intend to pass down remains with your children. By specifying the designation of your inheritance in your prenup, you maintain control over these assets, supporting your children’s financial security and upholding your wishes.
7. A prenup can protect your business
If you’re a business owner, a prenup can help you safeguard your company. Without this agreement, your business could be subjected to the complex asset division process during a divorce, potentially disrupting its operations and jeopardizing its future. A prenup can clearly define a business as separate property, ensuring it remains intact and under your control.
A prenuptial agreement could be especially helpful if you own a business with several other owners. Often, owners have an agreement that if any of them get married, they'll have a prenup that says their new husband or wife can’t get involved with the business or own part of the business if they divorce or one of the owners dies.
8. You can proactively determine alimony
Talking about alimony before you’re even married may seem strange and difficult. But if you do divorce, having the framework of alimony already built will make your split a lot easier. It lets you agree on a fair amount early on, just in case you ever need it.
Keep in mind that when creating a prenup, it's essential to be fair to both people. You want to ensure no one is left struggling if the marriage ends. The terms should be something you both think is right, not just one person making all the decisions. That way, it's more likely to be respected and followed if it ever needs to be used.
9. A prenuptial agreement may streamline divorce proceedings
If you do end up divorcing someday, a prenup can make the process smoother. Your prenup will act as a guide that answers big questions like who gets what. This means less arguing over details because you’ve already wrestled with the most critical questions. It's a way to make a tough time a little less challenging.
Having a prenuptial agreement can also speed up the divorce process. Since all the decisions about assets and responsibilities are laid out, the couple can move through the legal steps more quickly.
10. It can help you maintain financial independence
A prenuptial agreement gives you the power to safeguard your financial freedom within your marriage. It sets a solid foundation for handling your finances and ensures your security, no matter what twists and turns life takes.
The psychological benefits of this financial autonomy are significant. Knowing that you have the freedom to make your own financial choices and protect your assets can reduce stress and enhance the health of your marriage. This financial clarity and individual space fortify your partnership, enabling you to fully invest in the relationship with peace of mind.
A prenup can help your overall financial future
Prenuptial agreements might seem daunting, but they're about giving you more control and confidence in your marriage. They lay out a clear plan for your money and property, protect what you already have, and ensure you agree on your financial future.
I hope you don’t see prenups as a sign of mistrust but as a sign of mutual respect and care for each other's financial well-being. When you both know where you stand with money, you can spend more time enjoying your life together. So, think of a prenup as a part of building a healthy financial foundation for your marriage, one where both of you feel secure and empowered.
While an experienced attorney should create a prenuptial agreement, you should also consider getting guidance from a financial professional. My team and I are happy to meet with you to help ensure your prenup is written to provide clear guidelines and expectations for your financial journey together and assist you in creating a solid financial partnership from the beginning.
For a no-strings-attached consultation, please contact us here or call (269) 218-2100.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to ensure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
Allegiant Wealth Strategies offers securities and advisory services through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Allegiant Wealth Strategies has offices in Battle Creek and Portage, Michigan, from which we serve Calhoun County, Kalamazoo County, and Kent County (Grand Rapids). The Allegiant Wealth Strategies team offers no-obligation financial planning consultations; call 269-218-2100 or contact us here.