Couples who are heading for their impending wedding may find prenuptial agreements remarkably unromantic; after all, who wants to plan for the demise of their marriage before it has even started? Still, with the modern divorce rate continuing to skyrocket, couples would be wise to put their property division wishes in writing before a breakup occurs. Prenuptial agreements allow individuals who separate because of death or divorce to remain economically secure.
Prenuptials are increasingly popular among newlyweds because Americans are waiting until later in life to tie the knot. As a result, they have significantly more assets to protect. Most individual property will be held as communal property during a divorce, according to experts, because state laws offer little protection.
Think of a prenuptial agreement as a form of divorce insurance. Newly engaged couples often meet with a lawyer or financial planner at the same time they start their wedding plans. This practice allows the couple to avoid hefty legal fees later in life if they do choose to break up. Even though prenups may be seen as a luxury only afforded to wealthy Americans, everyone can benefit from drafting such a document. Experts say the emotional and social cost of litigation can far eclipse the financial investment in a prenup at the beginning of a marriage. If you are not wealthy, you can still benefit from a prenup. You may own items that have sentimental value, for example, or your retirement accounts could add up to $10,000 or more.
Some couples also draft postnuptial agreements if they reconcile after considering divorce. These documents provide the same protection as a prenuptial agreement, but they allow the couple to decide their property division strategy in advance if the reconciliation fails.
Remember that signing a prenup does not doom your marriage to failure. To make the process smoother, ensure that both people have their own lawyers present. Prenups take about three months to finalize, so give yourselves plenty of time to negotiate.
Source: Fox Business, “Why you should consider a prenup,” Andrea Murad, Feb. 4, 2013.