6 Reasons to Have a Prenuptial Agreement in Place before Tying the Knot
So, you are engaged and have probably started planning your wedding. But, have you thought about getting a prenup? The answer, most likely, is no.
Most people are under the impression that prenups are only for the rich and the famous. However, they are far from the truth. In reality, any engaged couple, rich or not, can and should sign a prenup to protect their wealth just in case the union ends in a divorce.
In fact, an increasing number of couples, especially millennials, are requesting prenuptial agreements. There was a 62% rise in the demand for overall prenups between 2013 and 2016 for a variety of reasons.
Before we see why signing a prenup is important, let’s see what it includes.
What Is a Prenup?
A prenup is short for a prenuptial agreement. It is a legally binding contract that determines how separating spouses will divide their assets and debts. Having such an agreement goes a long way in helping couples avoid a bitter and lengthy property battle during divorce proceedings.
Critical Elements of a Prenup
While the details of a prenuptial agreement will vary from couple to couple, a typical prenup drawn up by a competent family lawyer in Knoxville, Tennessee comprises the following.
Disclosure of Finances
A disclosure clause usually indicates that both spouses have disclosed all of their assets, debts, and other obligations. Apart from the finances, the disclosure clause may include, but is not limited to, criminal records, previous marriages, and any other relevant personal details that may affect the separation process.
Division of Debts
Most young couples, especially millennials, may not have a lot of assets when they get married. However, they do have considerable debts in the form of student loans usually. With this clause, you can protect spouses from each other’s debt.
Division of Property and Assets
In this clause, you can make decisions on how you will divide the jointly owned assets. In most prenups, separately owned assets and properties go back to their respective owners after legal separation.
This clause covers the details related to who will pay for which expenses during the marriage. For example, the husband may pay for the mortgage on the house while the wife takes care of different types of insurance and car loan payments. In other words, it allows you to outline your spending and saving strategies.
Waiver of Default Rules
As the family law varies by state, the default rule for division of property in case of a divorce is also different from state to state. If your prenup doesn’t have any specifications pertaining to the property division, it will be split between you and your spouse as per the state’s default laws. Including a waiver of the default rules will allow you to set property division rules in your prenup.
Protection against Invalidation
As a prenup is a regular contract between two individuals, the court has the right to deem it invalid. With this clause, you can protect yourself from potential contract invalidation by a judge.
Reasons to Have a Prenuptial Agreement
Different couples will have reasons of their own to sign a prenuptial agreement before tying the knot. However, there are a few common reasons why people sign it, and you should too.
Prevent Your Credit from Ruining
The division of finances and assets is a crucial part of your divorce proceedings. It also affects your credit to a great extent as divorce and credit scores go hand in hand.
Separating joint accounts, investments, and debts is often extremely tricky, especially involving a bitter divorce. In a divorce, the judge will usually issue a ruling known as the divorce decree. It will state how your assets and debts will be divided.
For example, if you own a house jointly, the judge will tell who keeps the house and who pays the mortgage. However, your bank (or any other lender) is not likely to honor the divorce decree. As a result, if your spouse fails to pay the mortgage on a house you live in, the bank can still foreclose it.
Having a prenup, however, can stop you from being on the wrong side of the financial responsibility after a divorce. It can prevent you from paying for the debt incurred by your spouse. Although it is not completely foolproof, it can certainly help ensure you are in a much better financial position.
Better Manage the Stress of a Divorce
Going through a divorce is an emotionally demanding process. Most people are already under a lot of mental pressure while dealing with guilt, anxiety, stress, insomnia, and other emotional health problems that come with an ugly divorce.
With a prenup, however, you don’t have to deal with the stress of unfair financial separation. For example, you don’t have to face the stress of losing your inheritance or paying for your spouse’s debt.
You need not worry about your or your children’s financial future either. It especially comes in handy if you are dealing with a spiteful spouse, who will try to take everything from you.
Protect Your Inheritance
Many people get some form of inheritance from their loving grandmother or an uncle. The purpose of inheritance is to secure your financial future. However, during a divorce, you may have to split your premarital inheritance or one received during the marriage with your spouse, especially if things get ugly.
With a prenup, however, you stand a good chance of protecting your inheritance from getting split. You should hold the inherited asset or money separately. If it gets commingled in with marital funds, you may have to share it with your spouse when separating.
You can, however, create a prenup that specifically addresses the issue of inheritance. You can draft it to make sure that your present and future inheritance will remain with you in the event of a divorce.
Shorter Court Proceedings
Another great advantage of having a prenup is that it allows you to avoid a drawn-out and costly divorce. Especially if you are going through an un-amicable divorce, it can make your spouse deliberately challenge every asset division, dragging the process further.
A lengthy court proceeding can put a lot of pressure on you and your loved ones. A prenup, however, clearly states how you are going to divide your assets, personal finances, and debts, things can get a little easier.
It can help you shorten the divorce proceedings considerably. For example, your asset division may already have been resolved as per the prenup. So, you will need less time and expenses for the discovery.
There is also less need for the court to intervene as the prenup has covered most of the things. Thus, you will be spending less time and money on your Knoxville, Tennessee family lawyer and legal actions.
Avoid Getting Your Pets Involved in the Break Up
Most people tend to treat their pets as family members. So when it comes to deciding who gets the dog (or cat) after a divorce, things can get pretty ugly.
In fact, as leading family lawyers in Knoxville, Tennessee, we have seen many spouses use their furry pets to hurt one another. Pets can often be used as emotional blackmail to get what they want by a spouse.
Fortunately, you can put your pet in a prenup, offering yourself peace of mind. It will also prevent your spouse from taking advantage of your emotional attachment to your pet to turn the table against you.
Prenup Supersedes Most State Laws
The purpose of a prenup is to secure your financial future in the event of a divorce. It essentially allows you to create your own set of rules for dividing your assets. So, instead of the cookie-cutter laws in your state deciding what you can and cannot keep after the divorce, you can decide it.
However, most state laws do dictate what you can include in a prenup. In Tennessee, for example, you can include your take on child custody and support in a prenup. But, you can’t decide custody and support in a prenuptial agreement unilaterally.
As you can see, from protecting your inheritance and assets to avoid getting pets involved in your divorce, signing a prenup before getting married comes with various benefits. Hopefully, learning about these benefits will help you to take the right steps and think of prenup as insurance. Have you thought of signing a prenuptial agreement?