The Importance of Prenuptial Agreements

Prenuptial agreements are becoming increasingly common for the cautious and financially astute of betrothed. Couples realise that asset protection is paramount –this doesn’t differ when the decision to form a common-law marriage is taken.

The Prenuptial Agreement Defined

The definition of a prenuptial agreement is ‘an agreement made by a couple before they marry concerning the ownership of their respective assets should the marriage fail.’

A prenuptial agreement is a practical solution for division of the assets in the event that the marriage fails. It examines any handling of future issues and concerns. A straightforward look at the couple’s finances and ownership – two topics that are typically sparingly discussed throughout the marriage, the prenuptial agreement allows couples to have a clearer understanding of their entitlements should the marriage dissolve.

A well-written prenuptial agreement may prevent any unnecessary arguments at the time of divorce, as well as offering a degree of legal protection. This process will smooth the transition between being married and separated. In addition, should any child support payments be applicable or property ownership be divided between parties, the division of these assets can be resolved at the time that the prenuptial agreement is drafted.

When a Prenuptial Agreement is Important

There are a number of situations when a prenuptial agreement is paramount. The first, and perhaps most obvious, reason for a prenuptial agreement is if one partner has significantly higher earnings than another partner. A prenuptial agreement can help protect any assets accumulated by one partner prior to the marriage.

A prenuptial agreement can protect individuals with insufficient means to do so, prior to the marriage. These include occasions when one partner is a business owner and the other is not. Without a sufficient clause in the prenuptial agreement one partner may be entitled to a share of a business once the marriage has dissolved.

Prenuptial agreements are also advised should one partner choose to re-marry. In this situation any financial commitments may change. Any probate, childcare, home or vocational obligations will change upon re-marriage.

The penultimate reason for a drawing a prenuptial agreement is if one partner has significant debts. Should the marriage dissolve the other partner shouldn’t be responsible for their former partner’s debts.

Many astute individuals have chosen to compile prenuptial agreements. Not only do they protect your assets should the worst happen they instil clarity and transparency in a marriage as both partners are aware of their entitlements should the marriage dissolve.