The decision to make a prenuptial agreement can sound upscale and classy — celebrities have prenups, you know. But the concept behind this agreement is based on common sense. You may be much wealthier than the person you are going to marry, and agreeing to a prenup shows that your partner is not marrying you for your money.
Much of the time, a prenup simply outlines how you will manage the assets brought into the marriage. The agreement might also address a major financial obligation involving one of the parties. Here are five of the most common situations that prompt a prenuptial agreement:
- You earn more money than your partner: In the event of a divorce, a prenup can limit the amount of alimony you would owe.
- You are a partial or full owner of a business: The agreement would prevent your spouse from becoming a partner or owning a share of the company.
- You will be remarrying: You may have children and assets such as a home from your first marriage. A prenup will ensure that in the event of your death, both your new family and your former family will be cared for according to your wishes.
- Your partner brings a high debt load to the marriage: A prenuptial agreement will ensure that you will not be held responsible for the debt if you should divorce.
- You will quit your job to raise the children: This decision will impact your income. A prenup can stipulate that both partners will share fairly in the financial requirements of child rearing.
A point of communication
In our modern world, people often enter marriage with considerable debt resulting from college loans or credit card use, or they come into it with child support requirements from a previous marriage. Discussing whose income will make the payments and how this will affect things like the household budget going forward is a good idea when couples are still very much in love and open to planning. If the marriage eventually dissolves, the prenup agreement can save a lot of time and effort, to say nothing of anger and stress, during the divorce process.