Although more couples are entering marital agreements in today’s society, there are still a lot of myths surrounding prenuptial and postnuptial agreements. The misconceptions involve all areas, such as the purpose of a marital agreement, who should sign one, and why they are needed. If you are trying to determine if a prenuptial or postnuptial agreement is right for you, here are some of the facts you need to make an informed decision.
Marital agreements serve a variety of purposes. Most people think marital agreements are only helpful if a couple divorces, but divorce is only one situation when a marital agreement is beneficial. Marital agreements are helpful in any situation where it would be important to identify which spouse has rights to assets or is liable for certain debts. For example, marital agreements are effective tools in estate planning. If a person wishes to leave property to someone other than a spouse, such as a child of a previous relationship, spousal rights may have to be waived by agreement first.
Marital agreements are not just for the wealthy. Marriage automatically grants certain financial rights and obligations, regardless of a couple’s wealth. Assets and in some cases, debts may become shared in the eyes of the law. Depending upon what happens during the course of your marriage, separate property could be considered to be marital property. Even if you and your partner have little assets or debt now, it does mean that will not change in the future. For example, one may undertake an unsuccessful business venture, or inherit precious family heirlooms.
Marital agreements benefit both partners. Marital agreements do not require one spouse to give up all financial rights. In fact, the court will not uphold a marital agreement unless it is fair and reasonable. A well executed marital agreement will address the needs and concerns of both partners. They are not a one-size-fits-all document; they are tailored to the specific circumstances of your relationship. A marital agreement can be as long and detailed as you need, or it can resolve only a few topics.
Marital agreements are relatively inexpensive. The monetary cost of a marital agreement should be weighed against the risks of not entering an agreement. The alternative to determining financial rights through a marital agreement is to have a court establish financial rights after a problem arises. All litigation, whether divorce, property distribution, or estate contest, is expensive and unpredictable. The upfront cost of a marital agreement is dramatically less expensive than the alternative.
Marital agreements can strengthen your relationship. The cornerstone of a successful relationship is communication, loyalty, respect and trust. However, financial decisions are a major source of stress for most couples. Marital agreements provide the opportunity to discuss important financial matters with your partner and allow you to create a financial plan for the future together. An honest conversation about marital agreements demonstrates that you and your partner trust each other enough to be open about your concerns and wishes for the future.
There are also many good reasons not to enter into postnuptial agreements. In certain circumstances they can be a very bad idea. A good way for you and your spouse to evaluate whether entering into a postnuptial agreement might be right for you is to discuss the matter with a marital mediator.