With so many high-profile weddings and divorces in the news lately, there has been a great deal of attention given to prenuptial agreements. Some experts say all couples need to draw up a premarital agreement so they can be completely open about their financial expectations. Others disagree, claiming the need for such an agreement depends upon the couple's specific situation. So, who's right?
Before answering that question, it is important to understand the intent of a premarital agreement. A prenuptial agreement is a legal document that lists the assets a couple owns, as well as specific instructions regarding how those assets are to be divided in the case of a divorce. These agreements can also detail how individual debts are to be treated, so one person does not get stuck paying another's debt if a marriage ends.
Many people do not realize that prenuptial agreements can even include different conditions that need to be met in order for assets to be distributed in a certain manner. For instance, an agreement may specify that if one spouse is guilty of infidelity, he or she loses any assets he or she might have otherwise received.
So, does every couple need a premarital agreement? There are a number of good reasons to consider getting a prenuptial agreement, including the high divorce rate and the financial openness such a discussion brings. However, many experts say the necessity really depends on a couple's situation.
In general, people who wish to protect the money they had prior to the marriage can benefit from a prenuptial agreement, even if they have substantially less than their partner. This is also true for individuals who are likely to inherit large amounts of money, or those whose income might suddenly increase in other ways. Business-owners and people with children from prior marriages may also wish to sign a prenuptial agreement in order to protect their professional property and family.
While prenuptial agreements are not suited for everyone, they can certainly be beneficial for many couples. Therefore, it is worth the time and effort to have a discussion about whether or not such an agreement is necessary.
Source: moneytalksnews.com, "Should Everyone Have a Prenup?," Stacy Johnson, 27 May 2011