Premarital Agreements: Planning Your Marriage
Contrary to popular myth, premarital agreements (also known as prenuptial agreements) are not just divorce-planning documents used when one partner has significantly more assets than the other. Rather, they can be a helpful and insightful exercise for the couple to undertake so that each party understands the other’s financial values and goals prior to the marriage. Couples should begin working on their premarital agreements soon after they get engaged.
Why Should I Have a Premarital Agreement?
Discussing finances and how to deal with them during the marriage can make the relationship and, ultimately, the marriage stronger. There are several reasons why it is a good idea to begin work on the premarital agreement soon after becoming engaged:
In order for the premarital agreement to be valid, there must be a full financial disclosure from both parties. This means that both parties will exchange documentation regarding all of their income, assets, and liabilities. While it can take some time to gather all the needed information, this exchange of information ensures transparency and lays a strong foundation of understanding before the marriage begins. It is vital that both parties are satisfied that all the information they want and need has been provided and all their questions answered during this phase of the process.
This exchange of information gives each party time to have his or her lawyer explain the law, the ramifications of the premarital agreement, and what future benefits they may be waiving. This ensures that each party is fully aware of his or her options which allows for an effective agreement to be reached together.
Getting started early means there is plenty of time ahead of the wedding so that the parties can complete the agreement with lots of time to focus on their wedding. Additionally, the parties will be confident that neither party was pressured or coerced into signing the agreement. Neither party should be able to later claim they were coerced into signing the agreement just before the wedding.
Benefits of a Premarital Agreement
When couples get divorced, there are generally many conflicts which arise regarding money and their financial situation. This is often because they came to the marriage with different expectations about how money should be handled. Working together on a premarital agreement starts the marriage off with the couple having a frank and full understanding of money, goals, values, and future practices.
As part of the process, the couple will discuss the value of money to the relationship. They will discuss how they are going to handle debt. They will discuss how to address savings and retirement plans. By the time they get married, they are on the same page about these very important issues. The premarital agreement will also address what should happen in the event one party should die during the marriage.
The Collaborative Process Benefits in Formulating a Premarital Agreement
Many people think of a premarital agreement as an adversarial document. Using a collaborative process provides the couple the opportunity to sit down with each other and their lawyers to talk about the legal requirements for the agreement and share with each other their expectations. The collaborative process allows the parties to work together to address their individual goals and their future life together. This makes sure the document is not one-sided but instead for both parties’ benefit.