Why EVERYONE Should Have a Prenup … And That Means You
So you’re not Katie Holmes and he’s not Tom Cruise, but you and your husband are getting divorced. Do you have a prenup?
Although prenuptial agreements are highly publicized in celebrity relationships, these legally binding arrangements are not just for the rich and the famous. In fact, more couples are signing prenuptial agreements than before.
Given the current economic climate, that's not surprising. The experts we spoke to suggest that these days, everyone should consider a prenup.
A prenuptial agreement not only covers current assets, but also gives people control over their future wealth, including the possibility of owning a successful business or acquiring property. (Anything relating to the well-being of children, child support payments or child custody is not included in a prenuptial agreement.)
Divorce attorney Vikki Ziegler tells us that you should consider getting a prenup if: you own a business or real estate; you are expecting a future inheritance; you earn more or your net worth is more than that of your partner; you have children from previous relationships; you have elderly parents that rely on your financial support; you or your partner has debt; or you want to leave your assets to others aside from your partner.
But that's not all. These days, couples are also signing prenups in order to fairly divide their debt, Ziegler explains. Student loans, third party debt, medical bills and large credit card debts are becoming the new grounds for prenuptial agreements. But this doesn’t only apply to young newlyweds entering marriage. Older couples have debt too, and that includes mortgages, unpaid medical bills, home equity lines of credit or even 401K loans.
While newlyweds may be on cloud nine with wedding planning and honeymoon prospects, the idea of a prenup can seem like the ultimate romance killer. But just because divorce isn’t foreseeable doesn’t mean a couple shouldn’t be aware of their individual and combined assets, cash flow and net worth.
"If someone is getting married without a prenup, they should see a psychiatrist," says attorney Raoul Felder.
And, according to family lawyer Alexis Neely, the discussion about assets and whether to enter a prenuptial agreement is one of the most healthy conversations a couple can have. It may even help prevent divorce by helping to sort out any foreseeable economic hurdles, she adds.
If you do forego signing a prenup and find yourself in divorce court, prepare for a long legal battle, Felder warns. "Divorce is the real romance killer!" he says.
Still not convinced? Consider adding a "sunset provision" to the agreement. Such a clause can be drafted into the prenup, stating that the agreement will no longer be valid after a certain number of years, or after a first child has been born. For some couples, such a provision may quell any anxiety that a trip to divorce court is a foregone conclusion.
If you're worried that you missed your opportunity, take heart — It's never too late to sign a postnup. Such an agreement can be made from the day after you are married until about 40 years after you tied the knot.
However, since postnups are relatively new, they are not widely recognized by all 50 states. Many states have different ways of handling these legal agreements.