Signing A Prenup Before Marriage

You’ve probably heard of the P-word when it comes to the notion of marriage: “prenup”. It is said that love comes first, then comes marriages and somewhere in between, prenuptial agreements come along.

Prenup stands for prenuptial agreement (also called a premarital agreement, marriage contract or antenuptial agreement) and is a private contract that is entered into by two parties before they get married. It states what will happen to either spouse’s assets in case of divorce, death or similar circumstances. 

It can either be perceived as being unromantic or be perceived as smart financial planning. A prenup ensures that your financial matters are treated according to your wishes, rather than some court's decision. 

There are very common misconceptions about prenups, such as the idea that they are just for the wealthy or that they are an indication that the parties might be anticipating a divorce. However, anyone who has personal assets, liabilities, property or children should consider a prenup. 

Here are a few smart reasons why you should get a prenup:

  1. Financial Transparency Between You and Your Partner: Prenups need both parties involved to provide full disclosure of their financial state including assets and debts. This leads to a very open, transparent and candid conversation about your current and future financial state. It gives you a clear idea about your partner's income sources and debt patterns. 
  1. Eases Out The Divorce Settlement Process: Deciding who gets which property or how business profits are going to be divided can become a painstakingly difficult process and can take up a lot of time and money. In one word? Messy. Prenups simplify this process as they provide an all-inclusive list of each party's pre-marital assets. In most cases, it also overrides divorce laws, making it easier for you and your partner to make stipulations according to your choice in the event of unfortunate circumstances.
  1. Keeps Your Assets Separate: If you have a family heirloom, inheritances or properties in the form of money or business or other assets, a prenup would ensure that these would remain with you in case of a divorce. It also ensures that the fate of your cherished items isn't left up to the court.
  1. Protects Your Children: If one of the spouses had to stop working to raise children, then, after a divorce, the stay-at-home parent may find it difficult to jump back to work to earn. Even though the custodial parent does get some form of child support from the other parent, it ends when the child turns 18. A prenup can help you fix the financial responsibilities of the children beforehand. In case you have children from a previous relationship, a prenup will also state clearly how the assets are to be divided between the children and the spouse.
  1. Protects Your Business: If you and your partner own a business together prior to getting married, a prenup would ensure that you don’t lose the business entirely to your partner and get your share of the business.
  1. Division Of Debt: If your partner has a lot of debt or has bad spending habits, then you could find yourself responsible for payments you might not even be aware of. People bring debt into marriage along with family and furniture.  A prenup limits your responsibility for your spouse's debts, in case of a divorce. How debt is to be allocated can save a lot of time and money during divorce proceedings. 
  1. Secures A Financial Future: If there is a significant difference between how much you and your partner earn, then a prenup can protect the lower-earning partner. If one of you had to give up a job or has made some significant sacrifice in the marriage, a prenup lays down the alimony terms to ensure that you are compensated for the sacrifices and are able to maintain the quality of life you were used to, prior to the divorce. 

A marriage is more than just a romantic relationship, it can also be seen as a business partnership, to some extent, and it's always better to be careful. Your spouse and you might be destined for a fairytale ending of “till death do us apart” but just the assurance that your assets are protected is a good feeling. But if you do split, it will be easier to sleep in the night knowing that you will get a fair settlement. 

In case your partner and you decided against a prenup prior to your marriage and decided later that a prenup would have been a good idea, you could still sign a contract, but in such cases, the agreement is called a postnuptial agreement or a postnup. 

Thus, a prenup definitely seems like the smart and prescient thing to have.

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