5 Common Myths About Prenuptial Agreements
Do you have a prenup? Prenuptial agreements have historically been viewed as a sensitive topic. While some see them as a practical tool for protecting assets and financial interests, others view them as a sign of distrust and a lack of commitment going into a marriage. But, despite the different perceptions, prenups can be a valuable tool to create clarity for couples today, who tend to be further in their careers and more financially established than in prior generations.
Let’s break down some of the most common misconceptions about prenups.
1. Prenups are only for the rich and famous.
Prenups are not just for the rich and famous─anyone can benefit from a prenup. In fact, they can be beneficial for all couples, regardless of their financial status. They allow you to have an open and honest discussion about joint finances, family wealth, investments, and debt while you’re on good terms with each other.
2. Prenups presume failure.
Prenups get a bad rap because they are often seen as planning for the failure of a marriage before it even begins. However, a prenup can actually help prevent conflict in the event of a divorce by establishing a clear understanding of each spouse's financial rights and responsibilities. The expectations have already been set and agreed upon, which can ultimately reduce the stress and emotional toll of a divorce while protecting the interests of both parties.
3. Prenups only protect the spouse with the most assets.
Prenuptial agreements protect both spouses and their respective assets and interests, and can be customized to meet the unique needs and concerns of each couple. In the case of a family business, a prenuptial agreement generally serves to protect the family business from claims of an ex-spouse. In addition to provisions for the distribution of property and assets, prenuptial agreements should also address issues such as alimony, childcare, spousal support, and what happens in the event of premature death of a spouse. This customization allows couples to tailor their prenup to meet their unique circumstances.
4. Prenups are not enforceable.
A prenup enables both parties to agree to terms in writing, and when drafted in accordance with the applicable state law, they are usually enforceable in court. But in the absence of a prenup, the distribution of property and assets in a divorce is determined by state law, which can result in a less than favorable outcome for one or both parties. State law may not consider the unique circumstances of a particular marriage. A prenup, on the other hand, allows couples to establish their own terms for the distribution of property and assets, ensuring that their interests are protected.
5. Prenups are too expensive.
A prenuptial agreement can benefit anyone who plans to marry and can ultimately reduce the cost and time associated if a divorce were to occur. By establishing clear and agreed-upon terms for the distribution of property and assets, prenups can help to eliminate the need for lengthy and expensive court battles reducing the financial and emotional toll on both parties.
No one wants to think about divorce as they are planning a marriage. But in today’s world, a sound prenup agreement can offer peace of mind, clarity, and protection in the unfortunate event of a divorce.