One of our first blogs outlined the benefits of getting a prenuptial agreement. From Kanye shouting “we want prenup, we want prenup” to the amount of relationships based on cohabitation and not marriage, the need for a prenup these days is growing, whereas the understanding behind them is not. Kanye makes it seem like a prenup will help when she’s misusing her child support for things like lipo instead of Tyco. That’s not necessarily how a prenup works. In certain situations, prenups aren’t just there to keep a gold digger out of your piles o’ gold. They are there to put your mind at ease when It comes to the financial security of your future. Further, they’re there to help you in the case of divorce.
Sometimes in a divorce, you may get a Judge that doesn’t follow the current case law. You may get a Judge who highly favors alimony or one who hates women and thinks no matter how long she’s been out of the market, she should just “get a job.” Prenups take away that uncertainty, but they’re also cold when looked at in black and white. The idea of approaching someone with a contract should you divorce, before you two have even started your marital life together, can be off putting. The fact of the matter is, if handled correctly, prenups can be a great way to start off your life together because it forces you to look at your finances, your financial future, and plan ahead. Just like a will, it isn’t fun to do, but it is a smart way to take out the uncertainty. Here are a few things you should look at when deciding if you want a prenuptial agreement:
- Estate Planning. You need to make sure that your prenup and your estate planning go hand in hand. The last thing you want is for each spouse to sign away all of their interest in the other’s estate thinking that means only in the face of divorce. Then, when a tragic death occurs, they realize it included their estate upon death as well. If one document says that your spouse gets everything, and the other document waives their right to everything, your planning has gone to waste and you may just have a fight on your hands with the family members. You need to keep complications to a minimum by hiring someone who can give you peace of mind.
- Debt. You must look at your debts going into marriage. If there are certain debts that your soon to be spouse has incurred that are ongoing in nature, and you don’t want to take them on, we suggest that you make sure you won’t end up having to touch them. If they are laid out in black and white, and the creditors come a calling, you have a document saying, what they can and can’t touch and who they can go after for that debt. Further, if your spouse begins getting a little crazy with the Amex or multiple clothing credit cards, make sure you handle that in a post-nupt before it drives you into a divorce. By showing your spouse that it is not joint debt, and that they are responsible for it alone, they may learn really fast what the value of money really is.
- Custody. Custody is not something that you need to include in a prenup because custody and child support are to be determined by the Court. However, children should be considered when you are looking at the overall finances of your estate. If the wife stays home to care for children, there should be a provision which should account for that. Perhaps you should think about renegotiating after the birth of each child. If one party stays home to raise the children for years, this should be accounted for in the agreement. Along the same lines, if there are other children from a former relationship living in the home, this needs to be addressed for their interest in their parent’s estate.
- Pet Custody.Pet custody is an entirely different story. As pets are seen as property, they can be divided in your prenuptial agreement. This is a time where you can determine who would get each furbaby and the finances of taking care of that pet. This is something to consider especially if you are both close with the animals. You can outline a visitation schedule if you plan on sharing the pets. You can dictate who will make what vet payments. Think about it, would you marry that person if you knew they were going to take your dog from you?
- Alimony. This is a hot item. Alimony is the number one reason people get prenups. They are terrified the wife is going to get alimony without a prenup, and there are laws which support this theory, depending on each situation. Alimony is one of those things that each month, when it comes due, the person writing that check is NOT happy about. The divorce was already contentious and having to watch the other person receive money from you, is a kick to the gut each month. This is another area in which renegotiation, every few years, is a good idea. As mentioned above, if the woman ends up giving up her career to raise the children, and the husband fully supported that, should she then end up with no alimony 15 years later when she can’t get a job due to no experience?
- Business Interests. The best way to protect your business, is to make sure it is laid out in your prenup who owns what portion of what business. If one person is the “talent” and the other is helping run the business, it helps to put that into the prenup. Simply because he or she is answering the phone and scheduling appointments, doesn’t necessarily mean that he or she should get a large interest in your business. However, think ahead, is this person going to help you to the detriment of their financial future? Will they put their career on hold in order to help you build your business? A prenuptial agreement is there to keep you both financially secure and if one person is helping build a business, they should be compensated for their contributions.
- Personal Property. The amount of divorce negotiations that fall apart due to “stuff” is shocking. People will argue over curtains, guns, dvds, lego sets, and collectables for hours. Before you get married, and you have years of commingling assets, set forth who brought what into the marriage. This will help from getting caught in a “mine” shaft.
- Real Property. This is one of those things where it should also be reassessed every so often. If things are going great, purchasing a house together can be great. However, if things go sour, the different properties that are being paid for out of joint accounts, or simply acquired, should be addressed. Who gets the house? Who pays the bills associated with it? Who made the down payment? Where did the down payment come from? Are there other pieces of property that should be considered like a vacation home? The house is a huge issue, especially when kids and school districts are involved.
- Wrongful Acts. What better way to say that you’ll always be faithful, than to put some money on the line. Celebs put provisions in their prenups all the time relating to adultery or even drug use. It’s one thing to sign away all rights to alimony, and your spouse’s estate, when you’re a fool in love. It’s a whole ‘nother story when you devote your life to someone only to find lipstick on his boxers and you know if you leave him, you’re penniless. Make sure that this is addressed. Sometimes the key to his chastity belt is his wallet.
- Retirement. This is something that should be considered, just like alimony. Retirement is another point of contention when a divorce occurs. The problem occurs, once again, when one party has given up a career to care for the children. This is when retirement should be considered based off of the years that you two have been married. If your spouse could have, but simply didn’t, start their own retirement, there’s a good reason to protect your retirement.