Prenuptial agreements, or “prenups,” are contracts entered into before marriage that outline the division of assets in case of divorce. They may touch on things like spousal support (alimony), ownership of businesses and properties, and even financial duties and responsibilities during the marriage.
“Since getting into the business and seeing what can happen to family relationships in a divorce, I’m not sure there is an instance where a prenup would be a bad thing,” says financial adviser Jeffery Cortright, president of Phase 2 Investment Advisers in Jenison, Mich.While most people think prenuptial agreements deal with assets and alimony, there are a lot of other concerns that can be handled:
– Will you have to care for an older parent
– Who pays or supports the house when going back to school
– Agreeing to spending habits
– Who pays for what credit card debt
– Who handles the costs of a business
– Who pays the taxes
– What happens if someone dies or becomes disabledI’ve written about this issue before. Prenups aren’t only for the super-rich, but having a lot of assets is an excellent reason to have one. Even when couples have less than they want, the effort that goes into a prenuptial agreement can have benefits far beyond the financial. There are cases when a prenuptial agreement is a no-brainer. If one person is entering the marriage with significantly more money or assets than the other, or if one or both individuals have family money or inheritances, a prenup is necessary. Additionally, if you plan on keeping your finances separate, keeping separate bank accounts, or if you want one joint account for paying household bills, a prenuptial agreement is a great way to confirm it. One of the cardinal rules of a prenuptial agreement though, is following the agreement by keeping accounts separate after getting married. Generally, once you have moved to joint ownership and mix up accounts, dividing the account after separation could be tricky. If arguments about money are a top predictor of divorce, agreeing on the terms of a prenuptial agreement, and having the conversations about major issues you’re concerned about now, will lessen the chances of financial arguments and misunderstandings later. The USA Today article can be found here.