We are all familiar with the wedding vows recited in the generic Hollywood movie scene: "for richer or poorer, in sickness and in health." While most engaged couples may seek to make similar promises during their own ceremony, those with high assets may have different considerations to make if they desire to protect their possessions in times of sickness and health.
These considerations may be best addressed in drafting a prenuptial agreement. Although it may not be the romantic conversation to have with your beloved, individuals discussing aspects of a prenup can help to clear up misconceptions either have regarding finances and their future together. Drafting and signing a prenup can promote peace of mind that will extend past your walk down the aisle.
In deciding to sign a prenup agreement, you can establish how your assets, income and property can be protected in the case of divorce. For those entering a marriage who desire to safeguard a family inheritance, business interests or valuable property, this contract can ensure that such financial concerns are addressed.
Answering these questions can help create a contract that is tailored to your needs:
1. How will past assets and liabilities be handled?
In order for the prenuptial agreement to be considered valid, an honest accounting of assets, property and debt must be documented in the contract. While most people associate a prenup agreement with the catalog of financial assets each person brings to the marriage, debt must also be recorded. For those unsure of outstanding loans or debts, individuals are advised to check their partner's credit score. A prenup can establish which person is responsible for disbursing debt during the marriage and can shelter assets in the case of divorce.
2. Who will manage income?
Roles can be assigned in the agreement to establish which spouse is responsible for overseeing finances in the marriage. Tension can be reduced between those who save and those who spend by creating spending limits in large purchases, such as art work, clothes or property.
3. Who will act as the primary care giver to your children?
As more women are entering the workforce, the expectation that a couple's children will be raised by a stay-at-home mom is not as certain as it may have been in the past. Determining which parent will be responsible for tending to the children's needs to be discussed.
4. Who will benefit from family gifts?
For those who will receive a substantial inheritance, how will this sum be utilized? Who will be the beneficiaries of the inheritance?
5. How long will the prenuptial agreement last?
Known as a "sunset clause," this provision establishes the length the prenuptial contract is valid. Contracts can be drafted with an expiration attached.
While this list of questions is not exhaustive, it can lead to a more comprehensive discussion of finances. As it is probably obvious, there are many considerations that couples need to keep in mind when drafting a prenuptial agreement. Those with high assets who are entering a marriage need to be proactive in protecting their interests. Meeting with a knowledgeable attorney can help determine the best course of action to take when creating a prenuptial agreement.