The Pros and Cons of a Prenuptial Agreement

If you’re not yet married and are considering walking down the aisle sometime in the near future, you may be wondering whether a prenuptial agreement is right for you and your partner. When people get married, it’s in the hope that the union will last forever. Unfortunately, statistics are now showing that 50 percent of marriages end in divorce, so happily ever after is not guaranteed. An increasing number of people are choosing to protect themselves with a prenuptial agreement, because it spells out, in black and white, how your assets will be divided if your marriage ends in divorce. It’s not suitable for everyone, but there are some advantages you might want to consider.

The Advantages of a Prenuptial Agreement

  • Prevents the State from Dividing Your Property – US states have their own rules and regulations regarding the distribution of property in a divorce. In some states, for example, marital property is generally divided 50/50 if there’s no prenuptial agreement.
  • Ensures Family Assets Stay in the Family – It’s not uncommon for parents to ask their adult children to sign prenups. This is because they don’t want any of the money they plan to leave to their offspring going to a former son- or daughter-in-law.
  • Guarantees Fair Distribution of Assets – If you marry a partner with significantly fewer assets, you risk losing a large portion of yours in a divorce.
  • Shield’s You from Your Spouse’s Debts – If your partner has significant financial liabilities, in the event of a divorce, a prenuptial agreement can shield you from them.
  • Divorce is Less Complicated – Divorce isn’t something you tend to plan for, but if your marriage does end in divorce, a prenup makes it far less complicated. The division of assets in a high net worth divorce is already agreed upon by both parties.  
  • Protects Your Children – If you remarry after a divorce, it’s important to think about how your new marriage will affect your children from previous relationships. A prenup agreement can ensure their property rights are protected and enforced.

These are all pretty valid reasons for having a prenuptial agreement drawn up. However, it’s worth pointing out the disadvantages. It’s not always necessary, for example, because state laws sometimes cover many of the issues covered in a prenuptial agreement. There are also specific issues, such as child support matters, that can’t be resolved through a prenup, according to state law. The timing of a prenuptial agreement is often not right. If you’re still at the engagement stage of your relationship, it might be considered too early. If you’re young and haven’t yet acquired a significant amount of property or assets, it might also be too early for such an agreement.

One further downside that’s worth considering is that the idea of a prenuptial agreement indicates a lack of trust. On its own, it’s not going to encourage divorce, but some people feel it leaves couples more open to the idea of divorce or separation.

Now you’re aware of both sides of the equation; you’re in a better position to make an informed choice.

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