“What is the difference between a prenup and a postnup? Do you need one? And if so, which is the right fit for your marriage?”
Investopedia recently published an article, “Prenup vs. Postnup: How Are They Different?” It explains that if you or your spouse is wealthy, anticipating a big inheritance, or getting married for the second, third, or fourth time, divorce or death could result in serious financial trouble. In death, these issues are greater, if the spouse leaves children from a previous marriage. That’s why more couples are choosing to sign a prenuptial or postnuptial agreement.
As prenuptial agreement is made prior to the marriage, where the couple determines how they’ll divide their assets should the marriage end.
Although negotiating a prenuptial agreement before your wedding may seem unromantic, these agreements can save a lot of heartache and money in the event of divorce—especially when it's not a first marriage. When a couple decides to divorce, prenups can prevent nasty, drawn-out, excessively expensive litigation. A prenup details everything, so everyone knows exactly who gets what and there’s no room for argument. These agreements also can dictate financial distributions in case of a spouse's death, which is especially important for couples with children from previous marriages.
Prenuptial (before a marriage) and postnuptial (after a marriage) agreements detail how a couple will divide their assets if the marriage ends. Prenups are useful if one spouse has substantial assets, a large estate, or anticipates getting a large inheritance or distribution from a family trust. A prenup can protect each spouse’s premarital assets, as property and income in a marriage would otherwise be deemed community property.
Have an attorney draft one of these agreements, because tax law can create complications.
A prenup can have terms that state how much your spouse will receive of your estate, if you get divorced or die. This is critical if you have a significant estate and children from a previous marriage to whom you want to leave some of your estate. If you don’t sign a prenuptial agreement that states this, most states will automatically give your surviving spouse a share of your estate at your death. With a prenup, you can predetermine a specific alimony amount or even eliminate this.
Postnuptial agreements are almost identical to prenups. The big difference is that postnuptial agreements are made after the wedding. You will decide how to divide marital assets, as well as any future earnings, in your postnuptial agreement.
Reference: Investopedia (April 25, 2019) “Prenup vs. Postnup: How Are They Different?”