Prenuptial agreements are not just for wealthy or famous people. Many modern marriages could benefit from planning ahead and if you are about to get married, you might be surprised what a well drafted agreement can do for you.
At its most basic, a prenuptial agreement allows a couple to decide ahead of time how their property and debts will be divided should their marriage fail. However, the prenup can do more than just that, and some of the advantages aren’t obvious. Read on to see if any of the following fits your situation.
Financial issues cause a lot of divorces. I see it all the time. Because a prenup requires both parties to disclose their complete financial situation, the couple will have to sit and put some serious discussion into how they are going to manage their income and debts. An open and honest discussion about these issues will help you form a firm foundation to build your marriage. At the very least, you will have a clear picture of what you’re getting into.
2. You are wealthier than your partner
If you are going into a marriage with significantly higher income and greater assets than your future spouse, you may have some concern about what will happen if things fall apart. Generally speaking, property you own before marriage will still be yours after a divorce, but there are exceptions to this rule. Exceptions can make settling on property division and alimony time consuming and expensive. By listing ahead of time how specific pieces of property will be handled in case of a split, a proper prenuptial agreement will greatly reduce the need for discovery or other expensive steps while negotiating a marital dissolution agreement.
Furthermore, Tennessee law says that marital property will be divided “equitably”, not necessarily “equally”. This distinction can make negotiations more complicated, or even lead to an expensive trial. Much of this can be avoided with some planning.
So long as your agreed division is fair and reasonable, you can rest assured that you have some amount of certainty in your future. This may be particularly important if you have children from a prior marriage and you want to protect your children’s rights to your estate.
3. Your parter has more income and assets than you
If you don’t have the earning power of your spouse, it may be in your best interest to make sure you’ll have some support in the future. The parties can agree ahead of time on the type, amount, and duration of alimony. The prenup can even include creative methods of calculating the alimony based on the duration of the marriage, the parties’ income, or other factors as the parties desire. For example, the alimony payment may change if one of the parties commits adultery or some other wrongdoing.
Furthermore, if you have been married before you may already be receiving alimony, but those alimony payments will likely stop when you enter another marriage. It may be wise for you to make sure you will continue to have support should this new relationship fail.
4. You own a business
If you already own a business, or you are a partner in one, this should concern you. If your marriage should fail you could find yourself giving some portion of your business to your spouse. Even worse, your business partners may find themselves with a new member of the partnership they never wanted.
Dividing a business interest can also mean splitting up all of its assets, which would include not only inventory and tooling, but even intellectual property like patents or copyrights to songs, screenplays, or books.
It’s not at all uncommon that one spouse will quit working in order to concentrate on raising the children. If the parties move toward a divorce, that spouse may discover that jumping back into the workforce is difficult after a long period of unemployment. Sure, there will be child support, but child support is not intended to be a sole source of income and the payments will stop when the children are 18.
6. You’re marrying somebody who has a lot of debt
If your partner has a weakness for debt or credit cards, you might find yourself in a situation where you are responsible for debts you didn’t know were incurred. It would not be at all unusual for you to discover your spouse has racked up enormous debt and you will be expected to share the burden of payment. Your prenuptial agreement can protect you from these unpleasant surprises by specifying that the debts will be the responsibility of whoever created them.
BONUS REASON: The law is not always fair!
It’s a court of law, not a court of fair. Our divorce laws aren’t bad, but they don’t always work well in every situation. Some people even avoid marriage due to the possibility of legal consequences and obligations that are undeserved. By working out a thorough prenuptial agreement ahead of time, you can exercise a great amount of control over most aspects of your divorce and your potential obligations after the end of your marriage.
Don’t think of it as planning your divorce, thing of it as clarifying expectations and relieving both of you from uncertainty. If you are considering marriage or about to be married, contact me to find out how a prenuptial agreement may be right for you.