“What do you think when you hear the word ‘prenup?’”
Prenups, or premarital agreements, are frequently used by those with significant assets. We see actors, entertainers and others using a prenup to protect their assets, in the event of a divorce.
Forbes’s recent article, “A Prenup For The Rest Of Us: Rethinking The Premarital Agreement,” says that the use of a prenup should be a tool for everyone, not just Tiger Woods, Madonna and Beyoncé.
Prenups can also be an affordable legal document signed prior to marriage that protects the interests of those of average wealth from the fighting that often happens in a divorce. A clearly worded prenuptial agreement written by an attorney can cut down costs in a divorce.
When a person files for divorce, each spouse must make certain income/expense and asset/liability disclosures to the other. However, with a prenup, you can do this before marriage.
The advantage of listing all your assets and debts before you get hitched, is that nothing’s been commingled at this point. However, if it has because of cohabitation, you need to make it clear who owns what. This can decrease arguments about the division of assets and the fees in the future.
If you assign property to each spouse at the beginning of the marriage, the couple will save energy, frustration, time and money. Note that California law states that if a party owns property prior to marriage, it will be separate property if they divorce. Issues can pop up when there are refinances during the marriage or loan principal is paid down using community property funds.
These are expensive and tough to prove in court, especially after a marriage of longer than a few years. This is because documents are often unavailable. A prenuptial agreement would control and address the need to try to locate documents that may no longer exist.
Traditional prenups address more than asset and debt disclosures. A well-drafted prenup also often discusses issues like how assets obtained during marriage should be divided in divorce, marital support and how to handle separate debts. These are all issues that could also be disclosed in a prenup.
The disclosures we’re talking about are required in a divorce, so why not make them requirements before you get married?
Reference: Forbes (June 27, 2019) “A Prenup For The Rest Of Us: Rethinking The Premarital Agreement”