Prenup: Romance Killer or Responsible Legal Tool

May 8, 2013 1 Comment

When your partner suggests a prenuptial agreement, you might feel like they are saying “I have doubts about your true agenda as well as our ability to make this marriage work for the long haul”.   Because a prenuptial agreement only becomes valid during a divorce, broaching the subject can feel like a romance killer for the newly engaged couple.

 

But prenuptial agreements do not have to be romance killers.  Couples who are pragmatic about finances tend to have the most long lasting marriages!  Unfortunately, the harsh reality is that over half of marriages end in divorce.  Divorce can be stressful, exhausting and expensive.  A prenuptial agreement is a legal agreement that defines the nature and scope of each spouse’s assets, anticipated assets and marital property in the case of a divorce.  A prenuptial agreement can make the division of marital property much smoother during divorce proceedings.

A prenuptial agreement has the reputation of being utilized by very wealthy men with trophy housewives.  That reputation is changing.  We live in a world where men are stay-at-home dads, women are corporate executives, divorces and second marriages are common, same sex marriage is legal and people are entering into marriages with monumental student loan debt.  Nowadays modern marriages are just as much about a romantic union as they are a financial union.  Prenuptial agreements help ensure the financial well-being of a modern marriage as well as make divorce less stressful.

Prenuptial agreements define the division of marital property in the case of a divorce.  Marital property can be tangible and intangible assets as well as debts.

  • If your spouse pursues secondary education and acquires debt, a prenuptial agreement can define that debt as individual debt.
  • If you plan on giving up your career to be a stay-at-home mom or dad, then a prenuptial agreement can compensate you for sacrificing years of work experience.
  • If during the marriage you have started your own business and it has become very profitable, a prenuptial agreement can limit a former spouse’s financial interest or control of the business.
  • If you have children from a first marriage, a prenuptial agreement can help protect their inheritance rights.

One of their main drawbacks is that you cannot predict the future.  Circumstances may change and what seemed like a fair division of marital property when the prenuptial agreement was signed could turn out to be a huge burden.  Another disadvantage to prenuptial agreements is that they are usually created during an engagement.   At this time it is hard for couples to imagine the marriage ever ending. This often results in one or both partners being very lenient in the prenuptial agreement terms and not looking after their best interest.

Filed under Uncategorized Tagged with , , , , ,

To Marry, or not to Marry? That is the Question

May 8, 2013 Leave a comment

People appear increasingly less willing to take the plunge and tie the knot, meanwhile national marriage statistics continue to take a plunge instead.

 

It is becoming more common for couples to exhibit all of the usual symptoms of a marriage without actually getting married. The causes behind this cultural shift are likely as complicated as the legal ramifications that transpire.  According to the US 2010 Census data, over 7.5 million unmarried couples live together.  Other trends demonstrate that unmarried couples are now more frequently sharing finances, making joint purchases, and starting families. Some couples even go as far as having a wedding reception and wearing wedding rings, but never sign any legal documents.

This issue begs a number of legal questions. Unmarried couples are exposed to a variety of uncertainties typically addressed by traditional marriage. These uncertainties include how to recognize divided or shared property and finances, discretion of care in cases of emergency and other decision making responsibilities between spouses. Additionally, it also leaves a mess of questions to be answered should the couple break up.

A couple that isn’t legally married will not receive any of the benefits that come with marriage, such as various tax breaks and other privileges.  However, there are still several ways an unmarried couple can protect themselves financially and legally.

Legally recognized spouses are usually automatic beneficiaries in estate plans.  An unmarried couple may want to write a will that ensures that their partner will receive property when the other dies. Otherwise, assets may be inherited by closer family members without that being the actual intention of the deceased.

Unmarried couples can consider creating a “living together contract” that outlines property division to avoid court battles in the event of a break up.  A living together contract should include the property or finances that one party had before the relationship began, and those bought, inherited or received during the relationship.  Living together contracts often include a method for resolving disagreements, such as mediation or collaborative law.

In Maryland, a child born during wedlock is presumed to be a legitimate child.  Unmarried couples should consider signing a paternity statement to protect a father’s rights in the event of a break up.

Unlike a marriage, unmarried couples are not responsible for each other’s debt and often enjoy a certain degree of financial independence.  However, this financial independence disappears when unmarried couples sign joint purchase agreements, cosign on a loan, or a partner’s debt is charged to a joint bank account. It is important for these couples to decide how to deal with debt.

Unmarried couples with no intention of marrying might find it helpful to seek the advice of a family law attorney who can help them draft contracts, paternity statements, or create an estate plan to ensure that each partner is treated fairly.

Filed under Uncategorized Tagged with , , , , , ,