• If you have been married before
• Either you or your partner has children
• There is a wide disparity in wealth
• Either person are small business owners

If you find yourself in one of these situations, you may want to protect yourself, your property, and your intentions in the event of a divorce. If either or both of you have been married before, you may have assets you have carried over into your current relationship, like property. If one or both of you have children from a previous relationship, you may decide to keep any child support separate. A prenup can also act as a way to protect where your inheritance will go in the event you pass away.

Another reason to sign a prenup would be if there is a large disparity in the wealth of the couple. For example, if one person is much wealthier they may want to protect their current and future earnings in the case of divorce. This also applies if one spouse carries a lot of debt. Without a prenup the spouse without debt could be on the hook for paying off any debt accrued by their partner. Finally, in terms of wealth, if one person does not work the couple may agree to allow for the working spouse to financially support the other.

Lastly, if either person is a small business owner a prenuptial agreement can protect your business. This can be especially important as a business owner may have investments with outside people, a business partnership, or you own a family business or a business which relies on your image. Without a prenup, a divorcing couple may be forced to divide the businesses in a manner which is not beneficial for the company.

To make sure your prenup is valid, there are a number of things you will need to take into consideration. Be aware that prenuptial agreements are governed by contract law so there are three considerations which must be followed. First, a prenup is only valid if both parties are represented by independent legal council, unless one party waives their right to independent council. Also, if one person does not speak or understand English, the agreement itself must be translated into a language which can be understood by that person. Finally, another aspect of contract law states that the agreement is not legal if there was unequal bargaining power or the agreement itself unfairly favors one person.

PREPARING A PREMARITAL AGREEMENT IS COSTLY

When compared with the cost of filing a premarital agreement, divorce is expensive. Without a premarital agreement in place, it’s necessary to negotiate every detail of the divorce. Negotiations between two people madly in love and looking forward to spending their lives together are likely to be more productive than negotiations between two people who have decided to divorce. The relatively small investment to create a premarital agreement is nothing compared to the cost of a divorce without one.

ONLY OLDER, ESTABLISHED PEOPLE NEED ONE

Young couples don’t usually have many assets at the time of marriage. However, if a premarital agreement is not in place, all assets acquired during marriage may be in dispute. The “what’s mine is yours” concept feels good at the beginning of a life together, but that could change if the marriage fails. When one spouse experiences great professional success, sharing the financial results with someone he or she no longer loves may not be appealing. It may not feel fair to split an asset 50/50 if making the purchase was possible due to an inheritance. Working out the details before getting married also helps young couples work through financial considerations they may not have thought of yet.

ONLINE FORMS ARE CHEAPER

An experienced family law attorney asks questions to gain a thorough understanding of what the client’s intention is. Then, the attorney translates the intention into an enforceable agreement aligned with the laws of the governing state. An online form can’t do that. There’s no such thing as a one-size-fits all approach to premarital agreements.

PREMARITAL AGREEMENTS MUST BE EXHAUSTIVE

It’s completely up to the couple to decide what they want to include in their premarital agreement. A good family law attorney will give advice, but it’s up to the couple to decide how much or little they want to include. Some common issues included are:

• Premarital assets
• Assets acquired during marriage
• Death of a spouse
• Spousal support
• Pension contributions

WE ONLY NEED ONE LAWYER

Although it’s certainly legal to share a family law attorney, it generally makes the divorce more complicated rather than less. One way to limit the cost of drafting the agreement is for the couple to privately discuss what they want to include. After creating a preliminary draft of the agreement, best practice is to use two separate lawyers to finalize it. The two attorneys will work together to draft the final product. Sharing an attorney can be risky. One spouse may claim to have not understood the agreement before signing it, and the court could decide to invalidate it.

It can feel awkward to broach the subject of a premarital agreement. Some couples overcome the challenge by including it in a general conversation about estate planning. All couples should discuss things like wills, trusts, medical directives, and powers of attorney. A premarital agreement is a natural part of an estate plan. Learning how to engage in difficult discussions about finances before walking down the aisle can strengthen a relationship and create a happier marriage.

Dispelling myths

Contrary to popular belief, prenuptial agreements (also called “premarital agreements”) are not limited to the very wealthy, nor are they used to ensure that one partner is denied his or her fair share of marital property in a divorce. Furthermore, prenups are not the proper forum to set forth specific provisions for one spouse to follow like promising to not gain weight or that dinner will always be at 6:30 pm.

Instead, prenuptial agreements should be thought of as a form of “divorce insurance.” When you buy a new car or home, you purchase insurance to protect your financial interests in the event that something unpleasant happens in the future. The same is true about your marriage. A prenup is a way to protect both parties’ financial interests while avoiding conflict in the future. By having financial arrangements made, there is one less thing to debate if the relationship goes south.

Potential uses

Perhaps the most common use for a prenuptial agreement is to set aside certain property for one spouse should the couple divorce. For example, a prenup could dictate that Joe’s family business remain with him if he and Mary end their marriage, but that she is, under California’s “community property” laws, entitled to a portion of the income from the business during the marriage. The same is true of medical practices or other professional businesses.

Prenups are commonly used in subsequent marriages to protect assets for one party’s children from a previous relationship. This can both prevent legal wrangling following a divorce and give a parent peace of mind knowing that his or her children have been provided for.