Prenuptial and post-nuptial agreements are used to help couples address financial issues that may arise during their marriage and in the event of divorce, separation or death. The only difference between the two agreements is timing. A prenup is entered into before the vows are exchanged, while a post-nup is signed during the marriage.
Among the many benefits of these agreements are that they require the parties to disclose their finances, financial expectations and goals in marriage. Money is a frequent area of conflict in marriages. Executing a prenup or post-nup enables couples to openly discuss their concerns and agree on asset division as well as spousal support in a convivial manner. Many couples, however, are uncomfortable about asking for a prenup or post-nup because they believe it taints their love for each other or shows distrust of the other party. The following tips can help you feel more secure about raising the topic:
- Focusing on concerns of family members. Often, the impetus for a prenuptial agreement is from family members due to the disparate wealth of the bride and groom. The parents of the wealthier spouse want a prenup to help ensure their family member has protected his or her financial rights. This issue may also arise during the marriage if it was not addressed before marriage. In either case, a party can point to his/her family as the reason for asking for a prenuptial or post-nuptial agreement.
- Reframing the issue. Many couples feel love and money are separate things, however, long term commitment means being comfortable discussing difficult topics. If one spouse is going into a marriage keeping secrets about their finances or their financial values, the marriage will not succeed. A prenup can help ensure that the parties are entering marriage knowing all pertinent information about their spouse. During marriage, a post-nup can save a marriage where finances are a constant source of tension. Deciding how they will deal with expenses, assets and income during marriage, as well as handle property division and spousal support in the event of separation or divorce, can bring the couple closer together since working together on a solution fosters trust and respect. We consider a prenuptial agreement to be marital insurance.
- Acknowledging the importance of financial issues. Interestingly, millennials seem to be more amenable to discussing their finances with partners. This may be because many have been the children of divorce. They also may be more sensitive to financial issues because of their circumstances. The reality is that individuals are marrying later in life and, as a result, often come to the marriage with significant income, assets and/or debt. If one party is a saver and the other a spender, or someone has substantial student loans or bad credit, these circumstances will affect the marriage if these issues are not discussed.
- Second marriage. Second marriages are common and raise significant financial concerns that should be addressed in a prenup or post-nup. For example, a party may have financial commitments to his/her former spouse and child which should be disclosed since they affect the new marriage’s financial situation. In addition, if there are children from the prior marriage, the party may want to make provisions in the agreement to ensure those children’s inheritance is protected. As noted above, second marriages also occur later in life so the couple is more likely to have accumulated assets and debts that should be discussed prior to or during marriage.
A prenuptial or postnuptial agreement can be an effective tool to solve asset division and spousal support as well as other financial issues before they become legal issues in a divorce. However, like any contract, these agreements should be carefully negotiated and vetted by an attorney for each party to ensure they are fair and address the needs of each spouse.
If you are considering a prenuptial or post-nuptial agreement, please contact us to find out how we can help.