Understanding the Importance of a Prenuptial Agreement?

Answer 1

A prenuptial agreement, more commonly known as a prenup, is a contract between two individuals who intend to marry or enter into a civil union. This contract, which is created prior to the union, outlines what will happen should the couple get divorced. Prenuptial agreements usually dictate how the couple will split their assets, property and handle spousal support. This agreement might also include provisions penalizing an unfaithful spouse or dictate certain spousal responsibilities. The main thing a prenuptial agreement may not contain is terms regarding the future custody or visitation of a child.

How to Determine If You Need a Prenup

Prenuptial agreements are used to protect the finances of both parties in case of divorce. Divorce can take a huge toll on a person's financial security. Without a prenuptial agreement, an individual might lose valuable assets he or she worked hard for prior to the marriage.

Still, it can be difficult to determine whether a person really needs a prenup. Contrary to what many people believe, these agreements are not just for the rich. Generally speaking, anyone with valuable assets, like a home or retirement fund, should seriously consider a prenuptial agreement. Business owners, breadwinners, future breadwinners and people with dependents from a previous relationship should also consider a prenup. If you fall into one of these categories, forgoing a prenuptial agreement might strip you of your rightfully earned income or assets should you get divorced.

How to Create a Prenuptial Agreement

For a prenuptial agreement to be valid, it must be in writing, created voluntarily and be reasonably fair to both parties. Neither party can attempt to hide certain terms or deceive their future spouse. To prove the agreement is authentic, both parties must sign the document in front of a notary public.

While these requirements are fairly straightforward, writing a prenuptial agreement can be difficult. To create this agreement, individuals protecting large assets should consult an experienced attorney. In this case, both parties should consult their own attorney to ensure the agreement is in their best interests.

Couples protecting more conservative assets can sometimes create their own contract using state-specific templates and forms. These forms are almost entirely written and allow couples to simply fill in the blanks. As long as your prenuptial agreement meets your state requirements, choosing to create your own contract or using an available template will save you both money and time.