A type of contract created by two people before entering into marriage. This contract could outline each party’s responsibilities and property rights for the duration of the marriage. More commonly, prenuptial agreements outline terms and conditions associated with dividing up financial assets and responsibilities if the marriage dissolves.
The United States boasts a divorce rate of 49%. Although experts may debate the precision of the numbers of any particular survey, divorce rates in the solid double digits underscore the reality that marriages have an extremely high failure rate.
Furthermore, the financial implications of divorce are becoming increasingly complicated. Because many more people are marrying later in life, a large number have had time to build their lives, amass assets, and assume responsibilities before they decide to tie the knot. Older single people may own real estate, businesses, or self-made personal fortunes. Divorced people, looking for love the second time around, may have more than just assets – they may also have financial obligations from their first marriages, including children or debts. (For more insight, see Kids Or Cash: The Modern Marriage Dilemma.)
Pros and Cons
The practicalities of modern life have made prenuptial agreements more acceptable than ever. These agreements can help to clearly define financial issues, reducing conflict during the marriage and preparing both parties for the consequences of dissolving their union. They can provide the less affluent spouse with the comfort of knowing that an end to the marriage doesn’t necessarily mean an end to the lifestyle to which he or she has become accustomed.
Furthermore, the presence of a prenuptial agreement allows a couple to make the important decision of how their assets will be divided should their relationship end in divorce, rather than allowing a divorce court to have the final say.
On the other hand, getting married is a public declaration of love and commitment and an exciting occasion for most couples. Mapping out a plan for what you’ll do if things don’t work out isn’t exactly the most hopeful and romantic way to begin married life. Indeed, discussing a premarital agreement can cause some people to doubt the strength of their marriage. Still, planning strategically today can help protect you against future crises.
To Sign Or Not To Sign
Discussions about a prenuptial agreement may be the first opportunity you will have to communicate with your partner about money. Like it or not, money is one of the things that most couples fight about, and financial matters will likely play a big role in your married life. These discussions can be an opportunity to lay the foundation for a secure future, or even present the chance to realize that you almost married the wrong person.
When it comes to deciding whether a prenuptial agreement is right for your relationship, it is important to set aside the emotional aspects of the issue and look at it from an objective standpoint. Get familiar with the applicable divorce laws and make sure you understand their implications before you sign on the dotted line.
A contract created by spouses after entering into marriage that outlines the ownership of financial assets in the event of a divorce. The contract can also set out the responsibilities surrounding any children or other obligations for the duration of the marriage.
Also known as a “post-marital agreement” or “postnup”. Similar to a prenuptial agreement, postnuptial agreements allow a couple to alleviate tension caused by financial concerns. Entering into this style of contract will allow spouses to establish an equitable distribution of assets if the marriage dissolves. It is also necessary if you plan on distributing your estate to your step-children.
Marital agreements, including postnuptial ones, are often considered taboo. Critics argue such contracts indicate the couple expects the marriage to fail. However, if a contract can remedy financial discomfort, the couple could choose to enter into an agreement in hopes of keeping marital harmony.