Imagine the excitement of a wedding. Caterer, band, hall, and chapel are all booked. Invitations are sent. Mothers are arguing over whatever minute detail. The bride looks beautiful in her wedding dress, and tuxes are being fitted. Next step, and most romantic of all, make an appointment with your attorney for a prenup…
Okay, my involvement in weddings, not so glamorous, not spiritual, not so memorable, but perhaps one of the most essential parts of the wonderful transition of weddings.
What is a prenup?
A prenup (prenuptial agreement) is an agreement signed by parties in contemplation of marriage. Once married the prenup is an enforceable contract so long as it is consisting of the following:
- Spouses agree to it voluntarily and understand its terms.
- Prenup accurately accounts for each spouse’s assets and debts.
- It is not unfairly one-sided.
- It is executed before the marriage without undue influence or duress.
Historically, prenups HAD to be signed prior to marriage, but in 2023, a new law permitted postnuptial agreements. Postnuptial agreements have the same requirements of prenup but are entered after marriage instead of prior to marriage.
Custody, child support, and spousal support cannot be included in prenups and are issues for the court if the marriage is dissolved.
Prenups - financial security in death
Prenups not only protect finances through divorce, but also through death. Nothing is certain in life but death and taxes. If a spouse dies prior to the other spouse, the surviving spouse will inherit REGARDLESS of what a last will and testament states. The formula for this is complicated to discuss here. All you need to know is that a prenup assures financial distribution upon death. A will that disinherits a spouse or gives less money than 100% to a spouse can be challenged by the surviving spouse. It does not matter if the spouses have been separated, or if there are adult children, or a historical family business.
Are prenups right for you?
So, which marriages are prenups essential for financial wellbeing? There are many reasons to have a prenup, but situations in which it is essential are marriages with children from other relationships, family businesses, or complicated finances OR debt.
In these situations, financial distributions will be significantly impacted by divorce and death.
Situations where prenup may not be beneficial are first marriages, no children, very little assets, or debt. In these circumstances, a prenup may be less beneficial in divorce and death because any future earnings during the marriage is speculative and less likely to be impacted by a prior prenup.If you are heading to the alter or are married with a new need for financial security, contact Smith & Smith Law office to discuss the benefits of a prenup or postnup.