This is an article from The Law Offices of Cheryl David (http://www.cheryldavid.com/) in Greensboro, North Carolina, that we thought others may find helpful.
Many people fear that bringing up the phrase prenuptial agreement will cause turmoil in a relationship. Oftentimes just the opposite is true. One of the main irreconcilable differences leading to divorce is finances. Talking to your significant other regarding finances, property and marital asset management can head off a lot of these disagreements before they happen, nurturing healthy upfront, honest communication, which is a real benefit of a prenup.
Planning now, while you are most in love and most in tune with each other rather than later, when you need to argue it out, will diffuse what will very likely become power issues.
Whether to enter into a prenuptial agreement, then, is a very personal decision, based on your own unique circumstances and a review of the pros and cons of such agreements.
The pros of a prenuptial agreement include:
- Documenting each spouse’s separate property.
- Supporting your estate plan, and avoiding court involvement to decide property distribution.
- Distinguishing between what is marital and what is community property.
- Documenting and detailing any special arrangements.
- Avoiding extended court proceedings.
- Reducing conflicts during a divorce.
- Establishing procedures and rules for issues that may arise in the future.
- Assigning debt — credit cards, school loans, mortgages — to the appropriate spouse in order to avoid sharing debt liability.
The cons of a prenuptial agreement include:
- It’s not romantic. If you fear that discussing a property and finance distribution and the possibility of a separation or divorce will dull your relationship in some way, then a prenup may not be right for you.
- The timing may not be right. The beginnings of a marriage are typically a time of marital bliss, when many of the issues involved in a prenup are not even thoughts. You may be at a point in your lives when you don’t yet know the answers to some of these questions. The truth is they will come up eventually, whether during the marriage or if you divorce. If you think you just don’t have a basis for formulating decisions or answering questions, then the timing may not be right for you, and you will want to wait until after you are married, when you may know a little more about the management of your household. An agreement made after you’re married is called a postnup. These are enforceable, but be sure to consult an attorney before creating one, because the legalities and enforcement of postnups vary from those of prenups.
- There may be state laws that cover all the issues you want to address, without requiring a prenup. States have laws that determine how property is distributed in the case of a separation or divorce. These laws may be perfectly ideal for you. If so, there is no need to go through the trouble of creating a prenuptial agreement. On the other hand, there may be certain issues in your situation that are not covered by the laws and would nudge you toward clarifying the issue in a prenup.
- A prenup cannot include child support or child custody issues. The court has the final say in calculating child support. The court determines child support based on a “best interest of the child” standard, with several factors at play. A court would never uphold a provision of a prenuptial agreement that dealt with child support.
- A court can set aside any arrangements it finds to be unfair or not in the interest of justice. For example, courts have set aside provisions that don’t allow a spouse any share of the other’s bank account, if the account holder contributed greatly to that bank account during the marriage. The most common set-asides are alimony agreements and waivers.
- A prenup shouldn’t include personal preferences, such as who has what chores, where to spend the holidays or what school the children should attend. Prenuptial agreements are designed to address financial issues. Judges grow uncomfortable when they see private domestic matters included in a contract and will often view the document as frivolous, striking it down.
Reviewing these points based on your specific situation can help you decide whether a prenuptial agreement is right for you. Know that while a prenup is a binding contract, it is open to amendment in a postnup should circumstances change. Interestingly, a Harris Interactive poll of 2,323 adults revealed that 15 percent of divorced Americans regretted not having a prenup. Asset-heavy marriage-minded partners may want to consider seeking protection in the event the marriage ends.