And after a very challenging 2020, being madly in love and planning for an exciting future can be intoxicating! But it is important to remember that marriage is a financial partnership that comes with legal implications.
So, as you plan the most romantic and memorable way to propose, it is critical to also consider what your financial union will look like, and as a part of that, how you will discuss sometime soon, the prenuptial agreement.
What is a prenuptial agreement, and why should I want one?
A prenuptial agreement, commonly referred to as a “prenup,” is a legal contract entered into before marriage or civil union that is unique to each couple, but typically addresses financial issues.
A prenup can preemptively set forth how certain assets retirement funds, real property, executive compensation such as restricted stock units and businesses are divided in the event of a divorce or legal separation. It can also protect your premarital property and inheritances, set forth estates rights and even determine how much, if any, spousal support will be paid in the event the marriage breaks down.
Essentially you and your future spouse can craft the prenup to suit your needs as a couple. For example, you can even protect your intellectual property rights or a future business, which might be merely an idea at the moment.
Many years ago, the perception was that prenups were for people with significant resources.
Now, prenups are more common. Some surveys indicate that more than half of “millennials” pursue a prenup before marriage. And for people who have been married and divorced, prenups can alleviate the concern of future divorce litigation. With a prenup, there can be the financial certainty that enhances a marriage.
Because one of the top issues couples argue about is money, and many marriages end in divorce due to financial discourse, preparing and executing a prenup is a smart thing to do.
For many couples, it can serve as a road map for their financial partnership during the marriage. For many parents who intend to gift significant assets to their grown children, it may be a relief to know that their hard-earned assets will pass to their grown children and even grandchildren and not end up in the hands of their adult child’s future former spouse.
Preparing a prenup requires planning and transparency
Another important aspect of discussing a prenuptial agreement is the realization that with marriage comes planning. That means being honest about career goals, debt, such as school loans and credit cards, expectations about child rearing and future inheritances and assets accumulated from prior marriages.
Here are a few financial questions to discuss with your soon-to-be spouse:
- Does either partner have a trust or expect an inheritance? Family wealth issues can get complicated quickly if you do not have a clearly written and enforceable prenup.
- Does either partner have a business that was created prior to the marriage?
- Does either partner own a home that both will move into after the marriage?
- Do you plan to have children? If so, will one parent be a stay-at-home parent and therefore need spousal support in the event of a divorce?
- If this is a second marriage, does either spouse have obligations to a former spouse or children from that marriage?
Issues will vary widely for each person and couple, but the common theme remains the same: be honest and transparent.
When should I bring up the idea of a prenup?
The right time to talk about a prenup is not when the wedding plans are made, nor as you are walking down the aisle.
The time to have the discussion about the prenuptial agreement is well in advance of the wedding and prior to venues being secured, the band being paid and invitations sent. Waiting until the last minute to present your prenup may start your marriage off to a poor start and create distrust.
How can I make it romantic?
A discussion about the prenuptial agreement can be extremely romantic. After all, you are now taking another step toward committing yourself completely to another person. Being honest and transparent about important and sensitive issues indicates that you are willing to share personal details of your life with your future spouse.
Some couples begin the discussion over a romantic dinner. Others may have the discussion over time, even during the initial stages of dating so that it is very matter of fact.
With a prenuptial agreement in mind, you have an opportunity to gain a complete understanding of your partner’s financial situation, your own financial situation, and also to be sure that you and your future spouse have similar expectations and goals and are honest and transparent about financial expectations.
There is so much to be gained from having a full and transparent understanding of your financial standing as a couple by thinking through the substantial issues that come with a marriage and family.
So, enjoy planning that romantic proposal on Valentine’s Day, and then in the not too distant future, propose a prenup!