It’s wedding season and there are many preparations for the joyous day. Have you thought about a prenuptial agreement? It’s becoming more and more relevant for reasons you probably haven’t thought of.
Here are 7 good reasons for a Prenup
1) Prenups Strengthen Relationships:
A prenup is an agreement about things that will come up in the relationship that are best understood and talked about now. In the glow of love and desire to be together happily ever after, entering into a discussion about a contract is not that appealing. However, if the practice of raising difficult issues and resolving them starts early, it will bode well for durability and happiness in the long run for the union.
2) Talk About What Is Important To You:
By identifying what is important to you and expressing it to each other you can work out the differences at a positive time and in a joyful light. To fulfill your dreams you will need to focus on practical matters, like financial planning, understanding money habits and disclosure of assets, debts and income. It’s better if the relationship is not based on vague illusions but on understanding and supporting each others’ dreams.
3) Talk About Money:
It’s an economic and emotional partnership. Disclosing present financial realities, making a plan and ground rules creates possibilities for bonding and security. Raise consciousness and confront issues, starting the practice of making intentional decisions now and in the future. Then the difficult issues are out of the way and you can relax and enjoy each other and the ride.
4) Protect Rights for Each of You:
You wouldn’t enter into a business partnership without an agreement laying out rights and responsibilities, conflict resolution strategies, assurances of being heard, having a measure of control – and, perhaps most importantly, a process for dissolution if it doesn’t work. Divorce is a $50B a year industry, largely due to the fact that these things haven’t been dealt with in the most important of partnership relationships. Family breakup is random and then left to lawyers and the courts with no predetermined, understood and predictable process or outcome.
5) Things to Discuss Up Front:
What kind of lifestyle do you want? How many children, if any? If having children – who will continue to work? If one stays home, what will be the compensation for time and opportunity lost in the job market in the event of divorce? What are your money personalities? Savers or spenders? What is the financial story for your family of origin?
All of these things can be made known, discussed and worked with from the beginning. Agreements can be made before you are married and modified as you go along to keep behavior in check so your future goals are met. You can work with mediators, attorneys, financial professionals, coaches and therapists as needed.
6) Develop Financial Plan:
Are you going to have HIS, HERS and OUR accounts? Is there a reason why some assets should be kept separate? Reasons might include other party in debt, threat of lawsuit, guarantee of business debts, high risk business situation, receiving assets from family, estate planning, keeping assets distinct for children from prior relationship, consistency for the prenup.
Adjust income tax withholding, determine contributions to retirement, insurance coverage (medical, dental, life, disability, long term care, car, homeowners or renters, umbrella or professional liability, selecting beneficiaries of life insurance policies, 401(k), pension, profit-sharing, 403(b) annuities and IRAs, registering assets in individual or joint title, writing a new will, health care proxy, living will, durable powers of attorney. Discussion of plan with adult children and providing a copy of the prenuptial agreement to third parties.
7) Empowering Women:
Having these issues discussed prior to marriage with agreements, advances women’s rights and ability to negotiate for themselves. Frankly it’s hard to get justice in the courts later, so claiming your power now is important. Things that come up include the financial consequences of staying home with children, supporting spouse through professional school, leaving your home for the home of a new spouse or not having an interest in the business because it’s hard to value.
There is opportunity for agreement for payouts in the event of divorce, equalized power at the table and legal, binding agreements. Having legal requirements for full disclosure and a more deliberative process at the beginning will begin to close the economic gap. You have more leverage before the marriage than after. You know what you’re getting in terms of the other person because the beliefs have all been brought out. It’s a positive atmosphere to get a fair agreement.
There is also an opportunity to talk about balancing other tasks like household and child-rearing responsibilities, freeing you to make more money.
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It takes more than love to make a marriage. It takes dispute resolution skills consciously developed over time. Work with collaborative professionals who can help you from the beginning, for the best chance at a lasting relationship or a lasting peace.
Click the image below to grab an Easy-to-Print comprehensive Premarital Checklist with more questions and ideas. If nothing else, it’s good for thought and discussion.
Dona Cullen, Attorney at Law / Mediator
Certified Divorce Financial Analyst
5200 Meadows Rd., Ste. 150
Lake Oswego, OR 97035