If you’re thinking of popping the question or are recently engaged, it’s likely someone jokingly may have told you to get a prenup. Contrary to what you might think, prenuptial agreements are designed to help, not hurt either spouse. The misconceptions around prenups make them almost taboo for engaged couples to discuss, let alone sign. Before you write off the idea of a prenup, let’s explore what they can do for you, your spouse, and your future.
What Is a Prenuptial Agreement?
A prenuptial agreement is a written contract between a couple that settles financial matters in the event of divorce or death. Also known as a prenup or premarital agreement, this document is made before marriage and acts as a rulebook if you part ways from your spouse.
Since prenuptial agreements are contracts, they must meet certain legal requirements to be enforceable. Under Iowa law, a prenuptial agreement must be in writing and signed by both prospective spouses. For any contract, you need some sort of consideration (i.e., the benefit each party gets by giving something up) to make it valid. Consideration in a prenuptial agreement is the marriage itself and nothing more.
To enforce a premarital agreement, both spouses must:
- Voluntarily execute the document,
- Disclose all property and debts to each other,
- Give each other enough time to review all their assets and debts, and
- Create a fair agreement for both parties.
Prenuptial agreements are effective once the couple marries.
Now that you have the basics of prenuptial agreements, we want to highlight prenup truths and debunk the myths surrounding this incredibly useful document for married couples.
Signing a Prenup Doesn’t Mean You Don’t Love and Trust Each Other
A prenuptial agreement isn’t about a lack of confidence or a sign that your marriage might fail. In fact, discussing a prenup is a great starting point for couples to build trust and design a financial strategy. As you talk, you create transparency around your economic situation, spending habits, and financial goals. It might be a difficult and uncomfortable conversation to have, but get it out of the way early on to avoid surprises down the road.
When it comes to prenuptial agreements, what’s love got to do with it? Not much.
Prenups Aren’t Just for Wealthy People
Any couple can benefit from a prenuptial agreement. Whether you have amassed great wealth or are just starting your career, use a prenup to protect your finances. An important prenuptial agreement consideration is protecting your future earning potential. Even if you and your spouse are not wealthy now, you may be as you progress in your career. How will you handle and allocate an influx of cash?
When discussing a prenuptial agreement, consideration should also be given to any family assets, like businesses or real estate holdings. If you and your spouse divorce, your ex could get an interest in those assets. A prenup can help separate and protect any family assets.
It’s also common for people with children from a prior relationship to have a prenup with their new spouse. You can allocate certain property to your children, but this must be done in conjunction with your estate plan.
You Control What Happens to Your Assets and Debts
Without a prenuptial agreement, state law governs the division of assets and spousal support payments. Iowa, for example, is an equitable distribution state, not a community property state. This means that if you get divorced, any shared property is divided fairly and equitably, not necessarily split 50/50. With a prenuptial agreement, you decide who gets certain assets and who assumes the debts.
Not only do you control your assets and debts, but you have the legal right to a fair premarital agreement.
Prenuptial Agreements Protect Both Spouses
It’s a fallacy that prenups protect only the richer spouse. As mentioned earlier, the law requires prenuptial agreements to be fair for both spouses. Otherwise, the agreement is unenforceable.
The best way to ensure fairness is to have your own legal representation. An experienced family legal matters lawyer can draft and review the prenuptial agreement to be sure it equally provides for you.
Prenups Help During the Marriage, Not Just After
Prenuptial agreements are a tool to establish roles and set expectations in terms of finances as you go into the marriage. Use this document to decide what sort of accounts to create, how to spend money, who pays what bills, and other financial decisions.
Postnups Are Not a Substitute for Prenups
Postnuptial agreements are contracts made after the marriage that govern the spouse’s finances, assets, and debts.
Not all states recognize postnuptial agreements. Iowa courts, in particular, do not uphold postnuptial agreements. Before pushing off your financial plans until after the wedding, consult with a family legal matter attorney to help you decide what’s best.
Customize Your Prenup
Although prenuptial agreements typically address the division of assets and debts and spousal support, you can make it your own. Include as much or as little as you think necessary.
For example, if you only want to protect your inheritance, then you can limit the scope of the prenup to that issue.
One topic the premarital agreement cannot cover is child support or any rights related to children. Another topic it cannot address is a waiver of spousal support.
Protect Your Future with the Help of an Experienced Family Legal Matter Lawyer
If you have questions about prenuptial agreements or want to write one, contact 303 Legal, P.C. We can help you create a prenuptial agreement that’s enforceable and protects what’s most important to you. Founding attorney Jonathan D. Schmidt is a distinguished family law legal practitioner who provides individualized attention to each client.
For a free review of your situation, call our office or fill out our online contact form.