People don't like to go into marriage planning for the possibility of divorce. However, it's essential for couples to take steps to protect themselves financially should the marriage end. This is especially important if one or both partners has considerable assets when they marry.
Prenups: An Insurance Policy in Case of Divorce
Prenuptial agreements are an important legal tool for detailing how assets and debts will be divided in a divorce and codifying things like spousal support. Even with prenups more common than ever, many people still find it difficult to broach the subject with the person they're going to marry.
Think of a prenup like a homeowner's insurance policy. You certainly hope that your home never burns down, but don't you feel better knowing you have the security of a policy if it does?
Protecting Your Business
If you own a business or share of a professional partnership, it's also essential to protect that when you marry. Divorcing couples can end up having long, expensive battles over a business. If you've worked hard to build your business or have been entrusted with a family business, you can and should protect your right to reap the full rewards of it.
Another way people can help ensure their financial security is to maintain at least one bank account and credit card that are solely in their name. Just be careful not to mingle the assets in your individual accounts with marital assets.
If you didn't get a prenup or your financial situation or other factors have changed considerably since it was drawn up, you and your spouse can have a postnuptial agreement drawn up. Postnups address basically the same things that are covered in a prenup.
For both prenups and postnups, it's important that each partner retain his or her own attorney. At a minimum, you should not sign a prenup drawn up by your spouse's attorney without having your own legal representative review it. That's beneficial to both parties, because if a spouse can reasonably argue that he or she was coerced into signing the agreement, didn't fully understand it or wasn't given a chance to read it carefully, it won't hold up in court.
Certainly it's more enjoyable to plan the details of a wedding and honeymoon than to meet with lawyers and financial advisors. However, planning for your financial security in the event of a divorce can save you considerable conflict, time and money down the road.
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