A premarital agreement (also known as a prenuptial agreement) is a contract between two soon-to-be spouses that lays out ownership of particular assets and includes other provisions if the marriage fails. This type of agreement is obviously not the most romantic thing that a couple can do before their wedding, but it can be extremely valuable in the event of a divorce.
There are a lot of misconceptions about premarital agreements, and understanding the reality of these contracts can help you determine whether you and your fiancé should draft this type of agreement.
- Only rich people need premarital agreements.
You may not realize just how many assets you have until you have to share them with someone else. Many people underestimate their overall wealth, but even if you’re not underestimating your wealth, a premarital agreement may still be a good idea.
Anyone can create a premarital agreement; there is no minimum amount of property or funds required. Deciding how assets will be divided in the event of a divorce can save time, effort, and stress in the future.
- Prenuptial agreements lead to more divorces.
The divorce rate in the United States is high, but this has little to do with the number of prenuptial agreements that couples use. In fact, prenuptial agreements can get the couple talking about serious issues in the marriage before they walk down the aisle, especially money matters, which are often the cause of many arguments. Having these conversations before the big day can strengthen the marriage and encourage couples to discuss hard issues at the outset of the marriage.
Some critics argue that prenuptial agreements indicate that there is a lack of trust between the couple. However, that is not necessarily true. Instead, prenuptial agreements are like insurance protection—you hope you don’t need it, but it is there if you do.
- Prenuptial agreements are designed to help the wealthy spouse and hurt the other spouse financially.
Prenuptial agreements that are designed correctly should protect both spouses. Agreements that are completely one-sided, unfair, or unethical may not be enforceable in court. In fact, California lays out certain requirements for prenuptial agreements to ensure that they are developed fairly.
California law requires that signing the agreement should be voluntary and that each party should specifically disclose all of their assets and debts prior to finalizing the agreement. If one party thinks that the agreement is unfair, he or she should not sign it.
- Prenuptial agreements are expensive.
Although prenuptial agreements often require the skill and experience of a family law attorney, they are generally not cost-prohibitive. In fact, if the couple does get divorced down the line, a prenuptial agreement can save significant amounts of money, reduce stress, and make the divorce process run smoother.
A prenuptial agreement will not deal with every aspect of a potential divorce, nor does it have to. Instead, it can address some of the most important issues to each party. If you are considering developing a prenuptial agreement, it may be helpful to meet with our family law team. Contact us today for more information or to set up an appointment.