If you are getting married, congratulations! Marriage is a big step in life, and it is something to be celebrated. But, while marriage has many benefits, it is important to know that marriage can present financial risks for both future spouses. Luckily, there are steps you can take to mitigate these financial risks.
Protecting yourself and your future spouse can be as straightforward as creating a prenuptial agreement, otherwise known as a prenup. At Cyrus Pacific Law, we help soon-to-be-married couples begin their lives together from a place of mutual understanding and trust through the creation of prenuptial agreements.
So let’s dive into our discussion of the pros and cons of prenuptial agreements.
Discuss your prenup with a qualified attorney at Cyrus Pacific Law.
Get StartedWhat Is a Prenuptial Agreement?
Prenuptial agreements, or prenups, are agreements between two partners that intend to get married. Generally, these agreements dictate how property will be divided upon divorce or the death of one of the future spouses.
These contracts are signed before the marriage, and they typically go into effect on the day of the wedding. At Cyrus Pacific Law, we recommend that each party have their own, independent counsel during the drafting of this document. This will help avoid any potential conflicts of interest.
What Does a Prenup Do?
As mentioned previously, prenups dictate how property will be divided if the couple should ever get divorced. More specifically, a prenup can assign ownership to certain belongings, including the following:
- Businesses,
- Cars,
- Furniture,
- Houses,
- Art,
- Savings accounts,
- Retirement accounts,
- Stocks and bonds,
- Gifts, and
- Inheritances.
Further, prenup agreements can also designate who will be responsible for paying off marital debt. Some common debts that can be assigned in a prenup agreement include the following:
- Credit cards,
- Household bills,
- Memberships and subscriptions,
- Auto loans,
- Mortgages, and
- Student loans.
These are just some of the rights and responsibilities that can be designated in a prenuptial agreement.
What Are the Pros and Cons of Prenuptial Agreements?
There are a lot of misconceptions surrounding prenup pros and cons. Many people believe that prenups are only suited for extremely wealthy couples. Others think prenups set up a marriage to fail. However, in reality, these are both myths. Below, we discuss some pros and cons of prenuptial agreements.
Pro 1: A Prenup Forces Couples to Discuss Their Finances
Couples end up getting divorced for many reasons, but one of the most common reasons is money. A prenup can force a couple to discuss how they want to handle their money during their marriage. Having this discussion before tying the knot can save you many financial arguments down the line.
Negotiations about terms also allow a couple to express their financial expectations and goals. Going into the marriage with this in-depth mutual understanding can lead to better money management as a team.
Pro 2: Prenups Can Protect Children
During a divorce, children often suffer both emotionally and financially. A prenup can prevent a lot of this suffering by designating children as beneficiaries of certain assets. This is especially helpful if you are coming into your new marriage with children from a previous relationship. The prenup can help ensure that your children and your current spouse don’t end up fighting over assets if you die or if the marriage ends in divorce.
Pro 3: Prenups Protect Businesses
If you own a business, you should have no doubts about the benefits of creating a prenup. Prenups are excellent tools you can use to protect your business’s resources, assets, and income. In a divorce, business ownership can be divided in two, causing the company’s future to become uncertain. However, a prenup can protect the business owner’s interest in the company while protecting the company from division.
Pro 4: Prenups Protect Important Personal Property
A prenup can protect personal property that may be of special importance to you. California is a community property state, which means that all property that is acquired during the marriage is subject to fair division upon divorce. However, if a prenup designates specific property ownership, that property can be shielded from community property division laws.
Cons: There Really Are None!
Some might say that prenups create a sense of mistrust between partners. They claim that creating a prenup is preparing for failure and signals a lack of permanent commitment. This is a common misconception. In reality, prenups foster more trusting relationships because each spouse agrees to protect the other’s financial interests—come what may.
How Can Cyrus Pacific Law Help You?
At Cyrus Pacific Law, we have the tools and expertise needed to help you negotiate a fair and equitable prenuptial agreement. Our firm has years of experience helping California residents start their marriages off on the right foot, and we can help you as well. To schedule a free consultation, you can reach out to us online or by phone at 213-429-7862.