According to the Centers for Disease Control, America’s 2018 divorce rate was 45%. While this is down from the oft-cited “half of all marriages end in divorce” statistic, it’s only a small improvement. With such high divorce rates, more and more individuals consider a prenuptial agreement. In fact, according to a survey conducted by the American Academy of Matrimonial Lawyers (AAML), prenups saw a 62% spike recently. So, is a prenuptial agreement the right decision? Keep reading for a comprehensive breakdown of the pros and cons of a prenuptial agreement.
What Is a Prenup?
A prenuptial agreement, also known as a prenup or a premarital agreement, is a legal contract made prior to the marriage. This contract allows the couple to agree on specific parameters around ownership and rights if the marriage ever dissolves — either via divorce or death. Most commonly, prenups detail asset and monetary ownership, as well as custody rights.
Pros of Signing a Prenup
1. Protect Premarital Assets
The most common reason for a prenup is to protect one party’s assets from the other. This is especially relevant if one person is coming into the marriage with significantly more net worth than the other person.
Without a prenup, if a divorce or death occurs, the state may get to decide how the remaining assets and property are distributed. In many states, this decision is left to a judge.
2. An “Easier” Divorce
Divorce is always challenging; however, a prenuptial agreement can make it slightly easier. Typically, agreeing on how assets will be divided can take a lot of time (and money) to figure out. A prenup provides already set guidelines, allowing the entire process to proceed much more quickly.
3. Protect a Business
It can become quite a mess splitting up the ownership of a business between two people. Many business lawyers will recommend that their founders get a prenup to protect their business ownership in the event of a divorce.
4. Protection From Debt
In some cases, one partner will enter a marriage with a significant debt burden (business loans, student loans, etc.). In many states, a court will divide this debt evenly in the event of a divorce, regardless of who brought it into the marriage. A prenuptial agreement can specify that the debt will remain with the original person.
5. Enhanced Communication
The scary fact is that a lot of couples don’t have financial discussions before getting married. This is a massive mistake as marriage bonds two people together — including their assets and debts. A prenup talk may feel unpleasant, but it pushes couples in the right direction. It gives both people a holistic view of the other person’s circumstances, including their net worth, assets, debts, and expectations in the event of a divorce.
Cons of Signing a Prenup
1. A Difficult Conversation
For the right couple, a prenup discussion is a positive thing and brings the pair closer together. Unfortunately, there may be instances when the suggestion of a prenup is such a difficult conversation it leads to a fight or a break-up. If both parties are not on board with a prenup, one person may feel attacked or mistrusted. That is why it’s essential to go into this conversation with an exact list of reasons why the prenuptial agreement is important and how it benefits the relationship.
2. Unfair Decisions
Some people sign whatever prenup is proposed because they believe that a divorce will never happen. In their minds, the entire discussion is ultimately irrelevant. Unfortunately, this type of thinking can lead to an unfair prenup that heavily protects only one side. To avoid this type of situation, it’s always recommended to involve a partial third party for each side. Legal representation for both parties can ensure a final prenup that is fair to all.
3. Irrelevant Conditions
It’s also important to note that the conditions set in a prenup can be void if there is a preceding state law. For example, a couple may put into their prenup custody conditions for children, but ultimately this may be decided by the state. It’s essential to get a prenup for conditions that can be legally set by the prenuptial agreement.
How Bergman Family Law Can Help
Bergman Family Law specializes in all forms of family law, including prenuptial agreements. It’s crucial to involve a lawyer in the prenuptial agreement process early on. Through years of experience with prenups, Bergman Family Law knows how to go about this delicate process as smoothly as possible. Get started today by contacting Bergman Family Law for an initial consultation.