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How Prenuptial Agreements Work
You might imagine that people with lots of assets and money need prenuptial agreements. However, any couple with individually owned property, assets, or significant debts should consider signing a prenuptial agreement. There may be valuable collections or sentimental items to consider or credit card and student loan debts.
Each couple’s situation will have its pros and cons regarding the need for a prenup agreement. Here are just a few.
Pros for Prenups
- Protect Individual Property and Family Heirlooms: Even if a couple enters a marriage with very few possessions, they will likely acquire assets individually and inherit property from their separate families. Signing a prenup can allow a couple to specify how they want to handle individual and inherited property in the event of a divorce.
- Clarify What Counts as Marital Property: How a court will divide a divorcing couple’s property varies from state to state. By determining how marital property will be divided in a divorce, a couple can save a lot of time, money, and frustration later if their marriage doesn’t work out.
- Protection From Debt: A judge in a divorce case may split a couple’s debts evenly, even if one spouse had more debt when entering the marriage. A prenup allows a couple to address their debts when entering the marriage and determine how they will handle them if they divorce later.
- Save Money and Time: Even amicable divorces can cost a lot of money and time. Divorces that are contentious can be very costly. Having a prenup agreement that addresses the most common legal issues in a divorce can reduce the time and money spent during a divorce.
- Open Communication: Though bringing up the topic of a prenuptial agreement can be awkward, it is a good way to be open and honest about finances, property, and expectations. Marriage isn’t just a romantic partnership; it is a partnership in all aspects of life. Even if you don’t end up signing a prenup agreement, establishing an open line of communication is beneficial.
Cons for Prenups
- Awkward Topic: During courtship, a relationship can seem solid, and the future appears bright. Bringing up the notion that the relationship may not last “till death do us part” can potentially put a damper on the relationship, even if only for a short while. Find the right time to broach the subject of signing a prenuptial agreement.
- May Be Unnecessary: If neither party cares how property would be divided in a divorce, then a prenup may be unnecessary. Also, some matters, such as child custody and child support, can’t be determined by a prenuptial agreement. Talk with a family law attorney to find out how your state’s laws would affect a divorce.
- Could be Unbalanced: Signing a prenup that gives a larger portion to one spouse could create an unfair balance years later. Acknowledging that one spouse is entering the marriage with more property is good, but if both spouses contribute to the growth in the property’s value, one may leave the marriage with less than their fair share of property. It is a good idea to consult with separate attorneys before signing a prenup.
Before tying the knot or drafting your own prenuptial agreement, consult an attorney who is experienced in family law to make sure you have all your bases covered. Contact our office today!
This article offers a summary of aspects of estate planning and family law. It is not legal advice and does not create an attorney-client relationship. For legal advice, Please contact our Houston office today at (713) 582-5088 or schedule a consultation.