Contrary to popular opinion, prenups are not just for the rich. But who are they appropriate for and how to you go about making one?
Prenuptial agreements, “prenups” for short, are written contracts between two people before they get married. They typically list all the assets each individual owns and specifies how that property will be handled during the marriage and possibly in case of death or divorce.
Carl Carlson, CEO of Carlson Financial said there are some good reasons couples should have one before getting married.
- Couples with children from previous marriages may use a prenup to spell out what will happen to their property when they die, if they want to pass on separate property to their kids
- Spouses with or without assets may just want to clarify financial rights and responsibilities during the marriage
- If you co-own some assets with someone else already, like a family business for example, then it’s not just to protect yourself but also those other interests
- A prenup might also be used to protect spouses from each other’s debt
- Some couples may decide in advance how their property will be divided in the case they do split down the road, which could avoid potential arguments
Carlson said a good time to start talking about it is before the marriage happens, but it can be a sensitive subject to bring up. Often, it’s seen as one spouse protecting themselves as the expense of the other, but in an ideal world, both parties would come to the table with a draft of how they’d like the assets and finances to be handled during or after the marriage and they would be able to come to an agreement.
Above all, it must be simple and agreed on by both parties. If there is any uncertainty, either it’s not clear or it’s not desired, you may want to think twice about signing, Carlson suggested.
If you decide to get one start by drafting your own agreement. There are online worksheets you can use to help determine what the prenup should cover and you can see some examples.
Finally, you should bring the prenup to separate lawyers to review, making sure the agreement is clear, fair and legally sound.