Prenups are practically a given for the rich and famous, but they’re useful for the average couple as well. Miley Cyrus and Liam Hemsworth reportedly had dramatic arguments over their prenuptial agreement, including shouting and tears. While forming the agreement was difficult, it did help ensure their separation went smoothly. The divorce was finalized within six months of their separation with no conflict over dividing their assets. This is the ultimate goal of a prenuptial agreement – making sure that if a marriage ends, it does so as peacefully as possible.
A prenuptial agreement decides how a couple will divide their assets and handle spousal support in case they divorce in the future. Enforceable provisions will vary by state. In California, a prenuptial agreement can cover both property that the couple owned before the marriage and assets they might acquire during the marriage. The couple can use the agreement to adjust the standard spousal support payments that a court might order. This can mean committing to pay more spousal support than what would be legally required or waiving one’s right to spousal support.
A couple can also control what is considered community property and separate property. For example, if one person owned a home before the marriage, it would usually be considered their own property, but the prenuptial agreement could label it as shared property instead.
Couples can use a prenuptial agreement pretty broadly to make decisions about their finances. They cannot however use it to make any commits to a certain child custody schedule or to waive child support payments. The family court system will always have the right to make or approve these decisions to protect the child’s well-being. The exception is that a person can use a prenuptial agreement to commit to paying for expenses that aren’t legally required, like college tuition. A prenuptial agreement also can’t require children to be raised in a certain religion or any similar parenting restrictions.
California couples can’t include any fault-based provisions because of the state’s no-fault divorce laws. For example, the agreement can’t say that one spouse will receive less money if the marriage ends because of their infidelity. Couples should be sure to understand state requirements so their agreement will be enforceable.
A prenuptial agreement has a few key benefits for couples as they prepare for marriage. First, it pushes them to have a detailed conversation about their finances and financial values. Money issues are responsible for around 22% of divorces, making it the third most common reason to end a marriage. Even if the prenuptial agreement itself doesn’t make a difference in the couple’s financial compatibility, making the agreement helps them take the time to understand their financial situations and avoid surprises later on. Couples may also feel more comfortable committing to a marriage if they know that, for example, they’re protected from their spouse’s debt.
If the couple does divorce, the prenuptial agreement will usually make the divorce faster, easier, and less expensive. Because they’ve already made decisions about how to divide up their assets, they’re less likely to need a drawn-out fight in court, which will reduce their legal fees. They’ll also minimize the stress involved in a high-conflict divorce.
A prenuptial agreement is also a good way to protect family heirlooms and inheritances. Inheritance is usually separate property, but it can become shared if the couple treats it that way. For example, if one person inherits a family home and the couple lives there together, the house is likely to be considered marital property. A prenuptial agreement can specify that the house remains separate property. If either or both parties expect to inherit wealth, this type of agreement can help them feel more secure about sharing it with their future spouse.
While many couples could benefit from a prenuptial agreement, there are some circumstances where it’s an especially good idea. If one person owns a business or holds shares in a family business, a prenuptial agreement can protect the business from divorce proceedings by naming it as individual property. If one future spouse owns property or is much wealthier than the other, a prenuptial agreement can protect their wealth.
If one or both future spouses have children from a previous relationship, a prenuptial agreement can be a good way to clarify how inheritance will be handled. The surviving spouse usually inherits most of the estate when their spouse passes away. The couple may want to specify how much should be set aside for the surviving spouse’s stepchildren in this situation.
Prenuptial agreements can protect spouses from one another’s debt. Three out of five surveyed Americans reported that they’ve considered postponing marriage because they don’t want to be responsible for their partner’s debt, so this can be a major benefit. An agreement can ensure that student loans, credit card debt, and any other debt remain separate property.
A prenuptial agreement is also a good idea if one spouse plans to make sacrifices in their career development for the partnership overall. For example, if one person expects to spend several years as a stay-at-home parent, they’ll probably have a difficult time returning to the workforce after a divorce. The prenuptial agreement can give that person extra spousal support or a higher percentage of joint savings to account for this. If one spouse plans to support the other’s education and increase their future earning potential, the couple should decide how to handle this if they divorce shortly after the spouse finishes their degree program.
Finally, some couples want a prenuptial agreement simply to clarify their rights and their overall financial situation. If a couple wants to maintain separate finances during the marriage, they can use the agreement to specify that all of their earnings should be separate property.
Prenuptial agreements are useful tools when preparing for marriage. To ensure that the agreement is legally binding and fair for both parties, each future spouse should talk to their own lawyer. Call 619-299-9780 to schedule a free telephone consultation or contact a San Diego family law specialist here.
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