In today's world, couples are more open to the idea of signing a prenuptial agreement than any previous generation. After all, millennials grew up witnessing 50% divorce rates amongst their parents. Additionally, the average age of marriage is increasing, with more assets and financial concerns to consider and protect.
All married couples have a prenuptial agreement. Either you and your spouse decide what it includes or you let a judge decide for you. One of the challenges associated with prenuptial agreements can be the discussion with your fiancé about one and why one might be necessary. Below are a few practical and transparent concerns that can help your fiancé understand exactly why a prenuptial agreement may be a responsible and necessary decision.
Children From a Previous Relationship
- If either spouse enters a marriage with a child from a previous relationship, then a prenuptial agreement is important to protect potential interests for that child. Upon death, a surviving spouse is entitled to certain rights that may override what a parent may want to leave for their children. A surviving spouse's estate rights may be waived via a prenuptial agreement, allowing an individual complete freedom to draft a will benefiting only his or her children.
- After entering into marriage, your spouse may have a claim to all new investments made after the date of marriage and appreciation in investments made prior to the date of marriage. A prenuptial agreement can allow for an individual to keep full ownership of all investments made prior to and subsequent to marriage.
- This may be extremely important if the spouse has business partners in these investments. It is not fair for a partner to be met with a new equity holder in an investment simply because a marriage did not go as planned.
- For any investment or business that involves a partner, it is a good idea to consider a prenuptial agreement in order to protect yourself and your business partners from outside intrusion.
- A prenuptial agreement can protect any real property previously purchased or purchased in the future. Further, a prenuptial agreement can waive a surviving spouse's right to homestead ownership of real property. If you are entering a marriage with real property or interest in owning real property in the future, it is a good idea to consider a prenuptial agreement.
- Retirement accounts may be an individual's most important asset. Divorce often causes a very messy split up of retirement account funds. It may be wise to agree prior to the marriage to keep retirement accounts completely separate.
- While some retirement plans are governed by ERISA and may not be waived via a prenuptial agreement, non-ERISA-controlled plans (like IRA's) are not subject to such restrictions and waivers in prenuptial agreements will be valid and enforceable. It is wise to speak to an attorney prior to marriage regarding your retirement plan.
- If one spouse enters the marriage with a large amount of student debt, it is wise to document this in a prenuptial agreement to ensure that the other spouse may not be held with any responsibility for that debt upon a possible divorce.
These are just a few of the concerns that a prenuptial agreement may help organize. A recent study points out that financial issues are the leading cause of divorce. Furthermore, 53% of married couples discuss financial issues less than four times a year, indicating it is very important to have financial conversations prior to marriage. A great way to initiate the conversation is the discussion as to why a prenuptial agreement may be relevant and necessary.
Please contact our office at 305-967-6307 for further advice regarding a prenuptial or postnuptial agreement.