A prenuptial agreement, or simply put, a prenup has been the subject of many heated debates. People have crossed swords on the subject both in the public domain, and even more so (understandably) in the private one. Why get married, some argue, if you’re already setting up the whole thing for failure by showing distrust in your partner? Others claim that, while not doubting their love and success of the relationship even a shred, it never hurts to prepare for the worst-case scenario.
Opinions widely differ, but one thing is for sure: Considering the current divorce rates, this sensitive issue is not likely to drop out of sight anytime soon. What’s more, divorce isn’t the only way marriages end: Accidents and disease happen, and so does death. A prenup can be of quintessential importance for one’s financial stability in the case of the death of their spouse.
Whether you will sign a prenup or not is a deeply personal decision between you and your partner, but it’s helpful to have all facts in check before you make any calls. However, if you do choose to sign a legally binding agreement with your other half before tying the knot, make sure to carefully consider what’s going to go in the document so that the prenup protects your best interests no matter what happens.
These are the top things you ought to put in a prenup agreement:
- Provision for your children from previous relationships
Those who discredit prenups as a means to selfishly protect your own assets may not be aware that this type of agreement also takes financial care of the children from the spouse’s past relationships. If you have kids with other people or from previous relationships, you can ensure they inherit some or all of your property by putting it a prenup. In other words, this means you can prevent any accidental disinheritance by clearly stating how your estate should be divided.
- Protection from your spouse’s debts
In case the marriage doesn’t work out, the last thing you want to pile on the broken relationship debris are monthly bills of your ex-spouse’s hefty debt or angry creditors at your neck. Limiting your debt liability can be a real life-saver if you get divorced: Creditors can go after marital property, even if you had nothing to do with the money owed.
- Division of assets
Each country has its own rules on the division of property in the case of divorce; rules which may or may not work in your favour, depending on the type of financial situation you’re in, or even might be in the future. Agreeing with your husband or wife on who gets what in the case of a divorce might not be the most pleasant of your conversations, but for many down-to-earth couples, it is a prudent and realistic move and one that is worth going through. You would be wise to interfere with pre-set national rules on the division of assets particularly if you own a business, a family heirloom, or you’re in for an inheritance, as you could lose all or a part of those in the divorce settlements.
- Protection of your estate plan
Besides for protecting your property, a prenup makes for an excellent estate-planning tool. Given that many people nowadays choose to get (re)married at a later stage in life, when they have already accumulated some wealth on their own which they prefer to keep separate, this hardly comes as a surprise. “A prenup can protect those assets from becoming mixed in with the assets and property accumulated during the marriage that would be divvied up as part of someone’s estate after death”, journalist Liv Moyer explained for The Wall Street Journal.
- Definition of responsibilities in marriage
Contrary to the first association most people think of when they hear the word “prenup”, it’s not just about who gets what when the marriage falls apart. A prenup can also be used to outline your marital responsibilities: who is going to pay the household bills, how will your joint bank accounts be managed, how much is each of you going to contribute to your savings, who will be accountable for what expenses, etc.