TJ, and Sandy had a romantic meeting. Sandy Webb, met TJ at a bar in Apache Junction, Arizona. Years later, TJ found himself on a hospital bed, staring death in the eyes as a result of cancer. TJ proposed to her right then and there to affirm his love for her forever, but Sandy had one request: she wanted a prenup.
What is a Prenuptial Agreement Anyways?
A prenuptial agreement, also known as an antenuptial agreement, premarital agreement, or simply a prenup, is an official and legally binding written document that is effectively a contract between two individuals entering a civil agreement or marriage. A prenup functions as a roadmap to manage the union of the couple, particularly in scenarios such as divorce or death. Prenuptial agreements also allow the couple to control the legal rights they receive from the government upon marriage.
The government already has established legislation that controls and regulates certain parts of marriage, both upon marrying and upon the annulation of the marriage:
- Child support and custody
- Retirement benefits, 401k’s, and pensions
- Division of property
- Savings and assets
These contracts allow the couple to give alternative paths to solving discrepancies between these issues in ways that may contradict what the government has already laid forth. Prenuptial agreements can be extremely useful for those hoping to establish a game plan for their marriage as otherwise, extremely turbulent court battles regarding these important topics have the potential to arise – potentially costing one or both parties a great deal. In the case of Sandy and TJ, an agreement such as this one cleared up a lot of uncertainty in the case that TJ’s cancer became too much for his body to handle – even more so as the two were both formerly married.
Why Prenups Are so Useful for Families
Despite the usefulness of this tool, there is a misconception in the United States that prenups are reserved for the wealthy and well-off. Potentially due to the assumption that prenuptial agreements are only useful if they are dealing with large sums of money or another outlandish theory, those in the lower to upper-middle classes have avoided partaking in these contracts.
This can cause direct harm to them and potentially place a couple’s assets, child custody, and rights in jeopardy. Over time, this phenomenon has affected huge portions of society, despite having tremendous advantages for married couples.
Clearing up the Question of Marital Property and Asset Division
Prenups allow couples to clear up who owns what. Oftentimes, this is made much easier before items and assets are utilized by an entire household. For example, should one partner have invested in a car more than the other, it may be in the best interest of the married couple to ensure that the car’s value is split based on how much was invested by each person. Alternatively, they may decide that the person who spent more on the automobile owns it outright. Later down the line, no matter who uses the car more, the prenuptial agreement will make clear who owns how much of the car should there be a divorce.
Businesses may also be considered an asset in the case of a divorce. Should it be declared a separate asset with the help of an attorney, it may be completely immune to liquidation or division between parties, saving one’s livelihood and income stream for the better.
One reason this is so important for individuals to do is that, without a prenuptial agreement, the courts will define marital property and divide assets based on federal or state law. Such as in the case of Sandy and TJ, it would be up to the local law in Arizona that may leave Sandy and her children without much of anything.
Protection from Potential Debt
Debt is a question that arises in many divorces. Whether it be credit card debt, student loans, or general bank loans for a small business, debt has to go to someone in the case of separation. In fact, some people are able to pin large amounts of their debt on the partner they are separating from with some sneaky tactics.
In any case, a prenup may make it clear that one person’s student loans are entirely their own or that the couple’s joint business debt will be split down the center. This saves not only plenty of headaches but also legal fees.
Identifies Inheritance to Offspring
Prenups allow people to designate certain assets to their children in the case of divorce. These powers go further to protect the inheritance of children from previous marriages being brought into new marriages. Although they are not related by blood to the new partner, what they will inherit in case of divorce will be protected before the marriage even begins.
Within the definition of prenuptial agreements is the fact that these are written up before a marriage begins. Yet, this does not mean that those who are already married cannot protect their assets and the like. A postnuptial agreement is a similar contract to a prenup that is produced by a married couple and their attorneys after they have already been joined in holy matrimony. Furthermore, postnuptial agreements may be used to clear up general financial matters such as checking account sharing and similar matters.
The Great Myth of Prenuptial Agreements
What must be recognized by those of all creeds is that financial matters are important no matter the income level. As a newly-married couple engages in a range of financial decisions that determine their livelihood over the course of their habitation together, it should be recognized that there is always a potential for divorce or death, just like in the case of TJ, who needed to organize his finances with his family prior to potential death – despite not belonging to the upper classes of society.
Although the sheer amount of money that will be in question in lower income will be lower, it still has the potential to make or break how someone will be able to lead their life after the fact. Someone may be saddled with enormous amounts of debt, the complete loss of important assets such as their house, and little to pass on to their children.
All in all, prenups are extremely helpful for individuals and their families. If nothing else but to prevent confusion down the line, prenuptial agreements prevent a range of issues from occurring. The ultimate benefit of entering into such a contract is that it gives couples a clear-cut roadmap to their financial future in addition to saving them money from attorney fees and unexpected debt or loss of assets.