When most people think of a prenuptial agreement (also commonly known as a prenup), they think of agreements made before celebrities or very wealthy people get married. As estate planning tools go, a prenup is something that can and should be used by any couple that has concerns about assets prior to getting married. A good prenup can be used to help distribute assets after one of the spouses passes on, and it can also form the cornerstone of a divorce agreement that both spouses can agree with.
What Is A Prenup?
A prenup is an agreement that is used to outline how a married couple will handle property rights for property that was owned prior to the marriage, and for property acquired during the marriage. The very wealthy use these agreements to protect family assets before marrying someone, but anyone can use a prenup to help protect their property and asset in ways that wills and other legal documents cannot.
Protect Family Heirlooms
Some families are very particular about who can claim ownership to certain types of family heirlooms, especially the heirlooms that have a significant cash value. It is not unusual for a couple to sign a prenup that outlines which property stays in the possession of the family of one of the spouses and cannot be claimed by the incoming spouse.
Help Distribute Property After A Spouse Has Passed On
In some cases, a prenup is used to determine how property or assets will be distributed after one spouse has passed on. This is especially useful when a prenup also outlines that one spouse cannot claim ownership to family heirlooms because of marriage. While a prenup might still be subject to probate after the spouse has passed on, it is a legal document that outlines how the spouse wants their property to be dealt with after probate is done.
Prevents Spouses From Taking On Each Other’s Debts
There is a misconception about marriage that states that when one person marries another, they also take on the debt of that individual. Two future spouses can agree to commingle pre-marriage debts, or they can put together a prenup that separates the debt and makes each spouse accountable for the debt they brought into the relationship. This is the kind of prenup that is most often used by people with significant means, and those who have average means and do not want to take on more debt than they can handle.
Identify How Financial Responsibility Will Be Dealt With During Marriage
Some couples understand the significant financial risk that is involved with getting married, and those couples often decide to do a prenup to outline each other’s financial responsibilities during the marriage. These types of agreements can be difficult to follow if it is found out that their terms do not serve both spouses in the best way. For example, the prenup might indicate that the wife will keep the family checkbook, but experience after the wedding indicates that the husband is better suited for the task.
A prenuptial agreement is not something reserved for celebrities and the wealthy. Any couple that is concerned about finances as they stand before their wedding or how finances will run after the wedding is over should contact an estate planner to discuss a prenuptial agreement.