Financial: Why You Need A Prenuptial Agreement

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Why You Need A Prenuptial Agreement

Couples planning to wed would be wise to consider setting up a prenuptial agreement. Although not generally high on the list for most bridal planners, having a 'prenup' could be a wise decision, particularly if you own significant assets.

More and more couples are using this process to stimulate important conversations about how they define and safeguard their partnership in terms of lifestyle, roles, and financial responsibility. It helps to determine how you and your partner define equality in your relationship. As well, you can work together to establish the value of non-monetary contributions to the relationship, such as being a stay-at-home spouse and career decisions.

Start from the beginning…

It's best to broach the subject early in the relationship.
Your engagement is likely the optimal time to come up with a fair and balanced agreement.
Prenuptial agreements can cover everything from who is entitled to the proceeds from a family business or partnership, to the ownership of certain assets.

They're particularly useful if...

Your net worth exceeds that of your future partner.
You have trusts, real estate or stocks that you have accumulated before marriage.
You own, or are a partner in, a business or professional practice.
You have children or grandchildren from a previous marriage.
You are early in your career and expect it to take off.
One of you will be supporting the other through college or university.
You or your partner has significant debts or outstanding loans.
You have a large stake in a pension plan.
You expect to receive certain gifts and inheritances.

There's no right or wrong way to set up the family affairs, nor is everything written in stone. Some couples, for instance, may decide that the wealthy partner will pay for all of the living expenses while the earnings of the person with the least amount of money will be earmarked for building up his or her own nest egg. In order for a court to uphold a prenup, both parties must be fully informed about each other's assets. You and your partner disclose the full extent of your assets and your debts, which can only be done from a place of trust.

Two lawyers required…

The document must be in writing, witnessed and signed before the marriage takes place.
Your partner must also be represented by independent counsel.
Find a legal team that's skilled in negotiation, not prosecution. And make sure they're well versed not only in marital law but in estate law, too.
Legal fees for a prenup will vary, depending on the complexity of the issues. Typically, they could easily add up to $2,500, a sum considerably higher than the cost of drawing up a will.
Prenups have been thrown out in the past because one spouse did not have their own legal representation.

It's also important to note…
A prenup does not waive a spouse's rights to financial support if the marriage ends, or to future child support payments.
It also cannot dictate how children from the marriage will be raised.
Like a will, plan to review your prenup every few years.
After 10 years of marriage, one partner might want to consider giving the other more than the original prenup provided for since their relationship had solidified.

Article submitted by Velma Carroll, Ten Star Financial Services.
Phone: 905.634.8834
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