For many of you, the first thing that comes to mind when you think of a prenuptial agreement is "gold digger." (Remember Kanye West's 2005 hit song "Gold Digger"?)
Yes, prenuptial agreements may protect you from the wiry claws of a gold digger (gender neutral, of course). But there is much more to prenuptial agreements that you need to understand and consider before you decide whether a prenuptial agreement is the right thing for you and your potential spouse.
A prenuptial agreement is a contract between you and your fiancé as you both contemplate marriage. In a prenuptial agreement, you and your fiancé outline terms that you both agree to related to issues such as the division of assets and debts upon dissolution, which could include businesses and real estate interests. These agreements may also deal with the waiver of spousal support upon divorce.
It is important to note that prenuptial agreements do not cover issues related to child custody and child support. They do not cover issues related to personal habits of your potential spouse that you may find annoying, such as smoking and chewing tobacco. For those of you who would like to include a clause related to sexual favors or consequences for bad behavior (unfaithfulness in the marriage), you are out of luck, as these will not be enforceable in this contract either.
It is a good idea to become familiar with prenuptial agreements so you can make an informed decision as to whether it is really needed. If you are young, with minimal assets and this is your first marriage, a prenuptial agreement may not be needed by you. On the other hand, your fiancé may require a prenuptial agreement if he or she has considerable assets. If this is your second marriage and you have children (including adult children) from your first marriage that you have to consider, a prenuptial agreement may be worth consideration for your own peace of mind and estate planning.
To minimize any conflict that may arise in the negotiation process of a prenuptial agreement, consider the following:
1. Uniform Premarital Agreement Act and Your State Laws: The Uniform Premarital Agreement Act (UPAA) is a uniform act that governs premarital agreements and have been adopted by numerous states including California, Wisconsin, Florida, Hawaii and Texas. It is important to check if your state has adopted UPAA and consult with a professional who can give you information on what the laws are of your state related to prenuptial agreements. This is important because some states, such as California have amended and tailored the UPAA. Each state is unique regarding the governance of prenuptial agreements so become educated and know what you're facing before you sign on the dotted line.
2. Romance and the Dreaded "P" Word: If you think the "P" word will extinguish the romance in your relationship, it may be a good idea to shift your perspective. Yes, it may be unromantic to discuss finances in the event of a divorce, but on the other hand, it is romantic to know that the person you are committing to for the rest of your life is open to discussing any issue, whether it be boring and even emotionally complicated. With that being said, be sure to openly and honestly discuss the prenuptial agreement well in advance of the wedding date. Rushing to sign a prenuptial agreement before the wedding is not a smart decision and can cause unwarranted anxiety and in the worst case scenario, may cause the agreement not to be enforceable.
3. Prepare in Advance: If you decide on a prenuptial agreement, both you and your fiancé will need to obtain counsel and full disclosure of all your assets and debts will be required so as to minimize the chances of having a court set it aside. This takes time as it will require you to obtain a lot of documentation related to your assets and debts. Not to mention, there is also a time lag due to the exchange process that occurs in order to review and revise the proposed agreement. Moreover, if you give yourself sufficient time prior to the wedding, you won't feel pressured to agree to terms that you haven't had a chance to think through. It is less likely that your prenuptial agreement will be challenged if an agreement is negotiated between you and your fiancé which each of you is comfortable with.
This is simply a snapshot of the prenuptial agreement universe. Whether you decide to go forward with a prenuptial agreement is a decision between you and your fiancé. In coming to the decision, however, be sure to do your due diligence and understand the terms you are agreeing to in any document you sign.