A prenuptial agreement can be one of the most contentious points of a marriage before you even say “I do.”
Many do not want to bring up a prenuptial agreement during the marriage planning because they do not want to think about an end to something that is supposed to be permanent. However, the reality is that 42 percent of marriages will end in divorce.
This number is so significant that it is important for everyone to think about the possibility of divorce and plan accordingly, even though it’s not exactly the most romantic sentiment.
Although prenuptial agreements are often talked about and frequently joked about, few people actually understand exactly what the document entails and its real-world implications.
Simply put, a prenuptial agreement is a contract. Like any contract, there are basic principles that must be followed. For any contract to be valid, you must give something to get something.
However, what you give does not have to be proportionate to what you get; the only requirement is that both parties understand the agreement and sign it freely.
What the prenuptial agreement controls is completely up to the parties entering into the agreement. While most people think of prenups in terms of money, there is no requirement that the agreement must only control finances.
A prenuptial agreement can control something as innocuous as a stuffed animal collection or something as important as the control of retirement accounts in the event of divorce. In any case, it is certainly advisable to have the prenuptial agreement control things of great significance in either monetary or emotional value.
Some will discount the prenuptial agreement based on the fact that at the time of the marriage neither party really has anything of value. But, it is important to remember that most marriages last between 15 and 20 years.
It is very likely that after 15 years, both parties will be earning more money than they were at the time of marriage, they will have started retirement accounts, bought and sold high-value property and own other personal property that has significant value.
Upon divorce, parties not protected by a prenuptial agreement will find themselves fighting to split all of these assets — and these fights can be costly.
A properly drafted prenuptial agreement can protect everything that you have worked so hard to earn during the marriage and lay to rest any fight for those assets.
For example, a clause in a prenuptial agreement could say, “Each party agrees that they shall have an undivided interest in their respective retirement accounts and have no claim to the retirement accounts of the other.”
As can be seen in this simple sentence, each party gets something (their retirement account) in exchange for giving something up (their rights to the other party’s retirement account). This clause fully protects what you have saved in your retirement account while fully blocking any claim you may have to your spouse’s retirement account.
Beyond protecting your assets, a prenuptial agreement can insulate the parties from the cost of litigation.
Most prenuptial agreements will include language stating that if one party brings suit regarding property covered by the agreement, and that party is unsuccessful, then the moving party shall be responsible for the attorney’s fees of the non-moving party.
This simply means that if your spouse sues you over the executed prenuptial agreement and loses, then she/he will have to pay your attorney’s fees.
Finally, a prenuptial agreement can operate to save both parties a significant amounts on attorney fees if divorce is ever necessary.
Most of the money that is expended in divorce is done so in an attempt to gain or protect assets of the marriage. Since a prenuptial agreement should contemplate the distribution of the major marital assets, there should be little to argue upon divorce. This will obviously make the divorce cheaper.
A prenuptial agreement is no more than insurance. It is meant only to protect you upon divorce, which may never happen.
It is important to remember that these documents are extremely technical, and so you should look for a law firm that has considerable expertise in drafting a prenup if you are considering one before marriage.
Ideally, you will never need to use a prenuptial agreement, but like insurance, if you do need the agreement, it can save you significant time and money.