The Pros and Cons of Prenuptial Agreements

By Wanda Marie Thibodeaux

When people walk down the aisle and get married, they hope the union will last a lifetime. The cold reality, however, is that roughly half of all marriages in the United States end in divorce as of 2012, says the Centers for Disease Control and Prevention. With the odds of splitting from a spouse so high, people turn to prenuptial agreements to protect their assets. These agreements are legal contracts that have both advantages and disadvantages.

Advantages of Prenuptial Agreements

A prenuptial agreement can protect your financial stability. This is the reason the majority of people create and sign a prenuptial agreement. In community property states — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin (Alaska is opt-in) – the law says that, without a prenuptial agreement, you and your spouse share assets, property and debts equally regardless of whose name is on titles, registrations or deeds. That can mean big financial loss if your spouse didnt contribute as much to the marriage monetarily as you did. In separate property states where the law says you own most non-joint assets and debts in your name, a prenuptial agreement can create a more even division of property and assets. Prenuptial agreements also can ensure your spouse doesnt get family heirlooms, and they define clearly what you and your spouse consider marital and separate property.

A prenuptial contract can protect the financial stability of your children. Without a prenuptial agreement, your spouse may receive monies or assets you intended your children to have. Many couples work together for the good of their children even after separating, but if your marriage creates a blended family, a prenuptial agreement can stop your spouse from taking assets or property for his own kids over yours.

You may be able to outline spousal support. The Uniform Premarital Agreement Act of 1983 is applicable to just over half of all states. In states where this law applies, it is possible to use a prenuptial agreement to create a basis for spousal support.

A prenuptial agreement reduces conflict. A prenuptial agreement is a legal contract the courts can enforce. When you sign one, you eliminate the possibility that you and your spouse will argue over particular issues, as the agreement dictates how those issues are to be handled.

Disadvantages of Prenuptial Agreements

Creating a prenuptial agreement implies you dont see the marriage as “forever.” Prenuptial agreements come into play only when a marriage dissolves. By creating one, you send the message there is a real possibility your marriage will fail. Your spouse might even take a prenuptial agreement as evidence you wont fight for the marriage if problems come up. This can be a real romance killer.

Establishing a prenuptial agreement can create burdens if circumstances change. People cannot predict everything that will occur in their lives or marriage. A prenuptial agreement is based largely on assumptions founded on current situations. Should situations change, the prenuptial agreement can complicate what otherwise would have been fairly simple matters. You will need to update your agreement just as you would your will, life insurance and similar contracts.

Signing a prenuptial agreement may necessitate a change in lifestyle. Even when prenuptial agreements cant outline spousal or child support, they do influence the division of property and assets. Therefore, a prenuptial agreement can guarantee that some money has to go to your spouse or children. This can mean you have a lower percentage of funds after the divorce with which to maintain your lifestyle.

Prenuptial agreements are subject to a judges opinion. Even if you sign a prenuptial agreement, if you take the agreement to court, its up to a judge to decide the validity and reasonableness of every clause. If he thinks part or all of the agreement is ridiculous, he can throw it out. Although an attorney who specializes in divorce can reduce the likelihood of this happening by alerting you beforehand to potential risks, there is no way to predict what a judge might think given the current context in which he reviews the contract. Non-financial (personal) issues such as whether your spouse will wear makeup or take out the trash are permissible in states where the Uniform Premarital Agreement Act applies, assuming the stipulations dont violate public policy or other laws, but the more personal issues you include in a prenuptial agreement, the more likely it is the judge will see the contract as less serious.

33 Comments

Leave a Reply

sixteen + one =