Premarital agreements, sometimes referred to as a prenuptial agreement, are legally binding contracts signed prior to marriage. These agreements typically govern how various issues will be handled during the marriage and in the event of a divorce, including financial issues related to property and income.
Though premarital agreements are primarily concerned with financial matters, they can also cover other areas like real estate, stocks and bonds, mutual funds, pension plans, IRAs, and other significant assets. Premarital agreements can also include arrangements related to spousal support and the division of marital debts.
It’s important to note that premarital agreements are not just for wealthy couples. Premarital agreements are beneficial for anyone looking for some peace of mind before they enter into marriage. They provide predictability in a divorce situation, which can save a significant amount of money and time. A well-crafted agreement can also act as a financial roadmap for the couple.
More and more couples are choosing to create premarital agreements prior to getting married. In fact, studies show that more than 50% of U.S. couples have at least discussed getting premarital agreements. In addition to the financial advantages, they are also becoming popular for social reasons, as they may encourage couples, especially same-sex couples, to be more transparent and honest with each other prior to marriage.
Creating a Premarital Agreement
If you’re considering creating a premarital agreement, it’s important to get legal advice and to have both parties represented by independent legal counsel. Premarital agreements must be drafted, negotiated, and executed in accordance with applicable state law.
Be sure that the agreement is clear and unambiguous and that it is complete and accurate. Additionally, the process of creating a premarital agreement should be undertaken without duress or undue influence. To ensure that all of these criteria are met, it’s a good idea to have a lawyer check the final document to ensure it’s valid and legally binding.
Though getting a premarital agreement may seem a little daunting, it can bring peace of mind and create more financial security for couples entering marriage. It’s a way of recognizing and preparing for the reality that not all marriages last and that having a plan in place can be beneficial in the event of a marriage dissolution.