Prenuptial Agreements or "prenups" still have a stigma despite the potential of being very helpful to couples planning a marriage. No one gets married with the intention of getting divorced, but some people assume that if their future spouse brings up the topic, they have no intention of staying married. Believe it or not, a prenup can actually help a marriage. As part of wedding planning, couples should consider the following, which may be addressed in a prenup:
- Protecting your estate plan: Prenups are relevant in more than just divorces. Many people assume that their Last Will & Testament will be controlling at the time of their death. But did you know that in New York State your spouse will minimally receive one-third of your estate, regardless of your intended estate plan? This can be concerning to some people, especially those planning a marriage later in life, particularly when there are children from a previous relationship that they want to protect and provide for. A prenup can help ensure that you intentions set forth in your estate plan are carried out at the time of your death.
- Discussing financial responsibilities during and after the marriage: A major issue in many divorces is the payment of spousal support. There are many reasons why one spouse may have limited income at the time of divorce. Perhaps they stayed home or took time off to raise children, or assisted in their spouse's business. A prenup can address the payment of future spousal support and take into consideration different reasons for a disparity in incomes. A prenup can also outline each parties financial responsibilities during the marriage.
- Protecting a business venture or other premarital property: Many people assume that, so long as an asset is in their individual name, those assets are there's to keep in the event of a divorce. However, in New York State, anything that is accumulated during a marriage is considered marital property, unless it fits into New York's limited definition of separate property. This includes increases in value of separate property as a result of the efforts of either party, including such active appreciation to property owed before the marriage. For example, if a spouse has a business at the time of the marriage and that business flourishes during the marriage due to a party's efforts, the increase in value that occurred during the marriage will be considered marital property subject to equitable distribution, unless there was a prenup to the contrary.
- Quicker, cheaper divorce: Let's be realistic, many marriages do end in divorce. Divorces can be expensive, especially when emotions get in the way. A prenup can determine how issues will be handled while the parties can communicate with each other and before negative feelings arise.
- Protecting from unknown debt: Generally, all assets and debt accumulated during a marriage are equitably divided between the parties at the time of divorce. This could also include credit card debt in one spouses individual name accumulated during the marriage in which the other party was unaware of. A prenup can set parameters and address how debt will be divided in the event of divorce.
- Getting to know the financial side of your future spouse and their goals: A prenup can be an awkward topic, but it can also be a way for a couple to learn about each other’s financial and personal goals and aspirations. The couple will also learn about who their future spouse is before the marriage which may help asses compatibility. After all, a marriage is a partnership and at times works like a business relationship. Each party to a marriage should be made aware of what type of relationship they are getting into before getting married, and a prenup requires financial disclosure and significant discussions between the parties.
Regardless of the intentions, the topic of a prenup provides an engaged couple an opportunity to fully assess their relationship. It can provide peace of mind and a clear understanding to help the couple grow smoothly into a long lasting and loving marriage.