The Benefits of a Prenup Agreement
Why is a prenup agreement worth looking into? There are many reasons.
Read on now.
Introduction
Getting married is an exciting time in life. Just knowing that it is the start of a future with your one true love makes it feel incredible. But while you are stuck in all the euphoria of the moment, it is hard to think that anything could potentially go wrong. Who wants to think about divorce before even getting married?
Having a moment of clarity to discuss the future can prove to be beneficial just in case something goes south in the future. Besides, being able to communicate effectively about these things now may just be a positive sign for the future.
What is a Prenup Agreement?
The term prenup is short for a prenuptial agreement. It is a legally binding agreement between the two of you before you become a marital unit. Prenups can be used to cover many different situations, but it always comes down to showing a distinct agreement between the parties concerning assets, debts, and other financial situations.
In the State of California, a prenuptial agreement must follow certain rules and regulations that are set forth by the California Uniform Premarital Agreement Act (UPAA). According to the Family Code of Califonia, it can contain all sorts of things concerning your financials, such as:
“(1) The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located.
(2) The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property.
(3) The disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event.
(4) The making of a will, trust, or other arrangement to carry out the provisions of the agreement.
(5) The ownership rights in and disposition of the death benefit from a life insurance policy.
(6) The choice of law governing the construction of the agreement.
(7) Any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.”
It is important to note that when it comes to limitations, prenups cannot address anything concerning child custody, spousal maintenance, illegal acts, unfair or unjust expectations of the spouse, non-financial concerns, or any specific terms of the relationship.
Validating a California Prenup
As mentioned above, there are a few things that need to be addressed before a prenuptial agreement can be considered legal and valid in the state of California. The following requirements must be met:
- It must be a written agreement as verbal agreements are not valid.
- It must be signed voluntarily by both parties. Neither party can be coerced or forced to sign the agreement under duress.
- Both parties may retain legal counsel to review the agreement – or the party must give a signed written statement that the terms of the prenup agreement are understood.
- A time frame of 7 days needs to be given for the soon-to-be-spouse to review the prenuptial agreement prior to signing and prior to getting married. This doesn’t mean that all 7 days need to be used.
Once in place, the prenuptial agreement becomes effective upon marriage. Violating the agreement or not having it properly executed can make the prenup null and void in a legal setting. This is one reason why it is so important to ensure your prenuptial agreement is drawn up appropriately – and you can do this with the help of an experienced attorney.
Benefits of a Prenuptial Agreement
Some of the most infamous and most successful financial advisors in the country will tell you that everyone should enter a marriage with a prenup agreement as a means of protecting yourself and your finances in the future.
So, why would someone wish to go through with a prenuptial agreement before getting married? They can actually be beneficial for both parties involved. Below are some of the most common benefits:
Open the Lines of Communication About Finances. When you are considering a prenuptial agreement, you will have to discuss this with your future spouse. And, let’s be real – financial situations are one of the biggest causes of fights and divorces. Openly discussing these things now can keep a healthy line of communication open in the future.
Protect Familial Assets. Sometimes you may have some assets that are family heirlooms that you want to make sure remain with you even if your marriage fails. With a prenuptial agreement, you can designate these things before you ever get married. That way, should divorce happen, you will not have to worry about the state dividing your assets and giving these precious assets to your ex-spouse.
Save Time and Money. If your marriage is heading for a divorce, this can get incredibly expensive and time-consuming. There are many legal fees and a long-drawn-out process of separating assets. With a prenup, you don’t have to worry about wasting all of these resources, as much of the financial division can be spelled out in the agreement.
Split Your Debt. Just as you are both bringing assets to the marriage, there is a good chance you are bringing debt, too. Thankfully, this agreement can help you to avoid sharing debt. This can prove to be beneficial if one party has a lot more debt than the other.
Hire an Attorney
Don’t let the pre-wedding bliss blind you to important affairs that need to be addressed before the big day – such as a prenuptial agreement. In the past, many people have hesitated even to bring this up as there has always been a negative stigma surrounding them. However, fast-forward to today, and more and more people are understanding just how beneficial a prenup can be.
One thing is for certain – you never want to do this without the guidance of an experienced attorney. A prenuptial agreement is a step you take to protect yourself, but if don’t incorrectly, you may be left with no protection at all.
Make the investment in your future and seek legal counsel today.
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