Entering into a marriage is a major decision. While there are certainly emotional implications, tying the knot also has a significant number of financial ramifications, too. To start, moving forward, many of your assets may be considered community in nature, which means if your marriage ends up failing at some point, your spouse will have the ability to seek their fair share of those assets.
If that reality has you worried, you might be considering what you can do to protect your financial interests as you head into marriage. One of the best options at your disposal is the creation of a prenuptial agreement.
Things to remember as you create your prenuptial agreement
A lot can go into a prenuptial agreement. After all, this arrangement, agreed to by you and your soon-to-be spouse, specifies how assets will be divided in the event of divorce and sets the financial expectations that will be adhered to throughout the marriage. It might seem pretty easy to put one of these agreements together, but as you start thinking about a prenuptial agreement you should remember to keep the following considerations in mind:
- Full disclosure is necessary: In order for a prenuptial agreement to be legally valid, you and your spouse both have to be honest in disclosing your income, your assets and your debts. If you give a false impression in any of these areas, a court might find that you manipulated your spouse into agreeing to the arrangement. This can then set you up for division of the marital estate, which can prove to be much costlier.
- Seek valuation: Before entering into a prenuptial agreement, you need to have a clear understanding of the value of your assets. For example, you wouldn’t want to agree to pay your spouse $250,000 in the event of a divorce if that money is tied up in a residence that still has a mortgage on it. So, be thoughtful about how you can set the terms of your agreement in line with the value of the community estate and your individually owned assets. This may require you to have valuations conducted.
- Understanding is key: You and your spouse are going to get off on the right foot if you both have a clear understanding as to the parameters of the agreement and the purpose. We know that broaching the topic of a prenuptial agreement can be difficult, but consider couching it in terms of protecting both your and your spouse’s financial interests while putting money concerns aside so that the two of you can focus on your relationship.
- Be thorough: You don’t want to leave gaps in your prenuptial agreement if you can avoid it, as any areas not covered by the arrangement can leave you exposed. Therefore, make sure that you’re addressing what will be classified as marital property, how debt will be handled, whether any restrictions will be placed on alimony, how marital assets will be divided, and the financial expectations of each party.
Do you need guidance for your prenuptial agreement?
It can be stressful to navigate the intricacies involved in the creation of a prenuptial agreement. And making an error in your document can have tremendous ramifications, leaving you susceptible to the kind of outcome that you were hoping to avoid.
That’s why it might be in your best interests to seek help from an experienced family law attorney if you’re wanting to enter into one of these agreements with your spouse. That way, you can rest assured that your financial interests are protected so that you can focus on building your new life with your significant other.