Prenuptial agreements can be a touchy subject for soon-to-be newlyweds. Approaching them can be awkward, feelings can get hurt, and many couples wonder if they need one. Prenuptial agreements, while possibly intimidating, can be very beneficial for couples for a multitude of reasons. A prenuptial agreement is a prime opportunity for soon-to-be spouses to meaningfully communicate about their financial positions and not only plan for the worst case scenario, but also for marriage.
Removing the stigma from prenuptial agreements
Prenuptial agreements have long been stigmatized as unromantic and a bad omen that foreshadows divorce. Modern couples are rejecting this notion and ensuring they thoroughly discuss finances with their significant other and establish a plan in the event a separation does happen.
Prenuptial agreements have many benefits in addition to the obvious aspect of protection that they offer. Prenuptial agreements can protect assets from depletion in the event of a divorce, change the way income is treated during marriage (marital/non-marital), spouses can waive maintenance (formally known as alimony), preserve the characterization of a non-marital asset and prevent them from being commingled, and allow the parties to establish how they will handle finances during the marriage.
While prenuptial agreements can in many ways affect property division, most jurisdictions will not enforce a prenuptial agreement that pertains to parenting time or child support. Additionally, couples take a risk when adding in less common provisions such as infidelity clauses.
Who can benefit from a prenuptial agreement
Another stigma surrounding prenuptial agreements is that they are only beneficial for couples with substantial assets. This is not true. Many types of couples can benefit from executing a prenuptial agreement; you don’t need millions of dollars to benefit from one. For example, spouses can ensure that a home owned by one spouse prior to marriage does not become marital property. People with closely held businesses, individuals with children from a previous marriage, people with significant wealth, people who foresee becoming wealthy, or anyone who does not want to risk a fifty/fifty default rule being applied by the courts if they divorce should all consider a prenuptial agreement. These agreements allow couples to be proactive rather than reactive.
The difference between prenuptial agreements and postnuptial agreements
Even if you are already married, you and your spouse can still enter into an agreement that is executed after marriage. A postnuptial agreement, not to be confused with a prenuptial agreement, is an agreement spouses enter into after marriage but has the same general impact such that spouses decide how property will be divided upon divorce. While the best option is to execute a prenuptial agreement before marriage, postnuptial agreements, when drafted and executed properly, can accomplish the same general goals.
Choosing a partner can be viewed as the biggest investment you will ever make. Having these conversations and making these important decisions prior to marriage can have a big impact long term and set the tone for a healthy marriage; and in the worst case scenario, an amicable divorce.
By: Morgan L. Stogsdill, Partner at Beermann LLP
Morgan L. Stogsdill is an Owner and Partner at Beermann LLP, She has been quoted in the New York Times and was included in Crain’s Chicago Business as “One of the Most Influential Women Attorneys” in Chicago.
For more information and to view more information about Morgan L. Stogsdill, go to: http://beermann.murillo.co/team/morgan-l-stogsdill/