Do You Need a Prenuptial Agreement?

I'm getting married soon and I'm wondering if I need to sign a prenuptial agreement with my fiance. I've heard they're a good idea but they seem so unromantic.

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While this kind of document doesn't exactly sound like the stuff of which romance is made, there are compelling reasons why couples decide to do it.

More couples are signing prenuptial (also called antenuptial) agreements for the simple reason that they don't want the law to dictate who gets what if the marriage ends. A properly executed prenuptial agreement can safeguard assets, protect loved ones, keep a business in the family or streamline divorce proceedings.

Some prenuptial agreements even cover such details as who will pay the mortgage or how child care will be handled, although lawyers usually caution against being too specific. Discussing those issues together is a great idea; including them in a formal agreement is probably overkill.

Do You Need a Prenuptial Agreement?

Although most couples don't sign prenuptial agreements, if your situation matches one of these you should seriously consider going forward with one:

  • You have children from a previous marriage. In most states, a surviving spouse has the right to inherit one-third to one-half of the estate. A prenuptial agreement can override the law and make sure your property goes to your children.
  • You own a business or are involved in a family company. A prenuptial agreement can prevent a small or closely held business from being split up or controlled by your former spouse or his family.
  • You each have significant assets or one of you has considerably more than the other. A prenup can specify that premarital property will be kept separate. In case of divorce, you can each keep any property and investments you owned before the marriage. Some agreements stipulate the amount of spousal support that will be paid if you divorce, but be careful: although you may escape paying alimony, you cannot abandon your responsibility to provide support for your children.
  • You are concerned about being saddled with your spouse's debt. You may want protection from credit card bills or business liabilities your spouse incurred before your marriage (or continues to rack up after you're married).
  • You are giving up a career or lucrative job to get married. A prenuptial agreement can compensate you for your sacrifice if the marriage fails.

Are They Always Valid?

In general, there are four essential ingredients for a valid prenuptial agreement:

  1. It must be in writing and be executed before the marriage.
  2. Neither party can be pressured into signing. If your spouse-to-be springs the document on you as the guests are being seated, chances are the court will throw out the agreement.
  3. The agreement must be fair and based on full disclosure of assets and liabilities by both sides. You should understand the financial information provided by your spouse-to-be. If you don't, ask before you sign. Hard-to-value assets like a small business are worth appraising.
  4. Each party should have the benefit of independent counsel. This is not a do-it-yourself document and one lawyer cannot fairly represent you both.

Is It Worth It?

Prenuptial agreements are expensive to prepare because each one is tailored to the couple's particular situation. (Lawyers' fees of $800 to $3,000 are common.)

Probably more distressing is the emotional toll these agreements can take on a couple just as they are preparing for a joyous event. As one lawyer put it, prenups go to the very core of trust. You may see a prenuptial as a sign your spouse-to-be doesn't love you enough to share, while he may assume if you love him, the agreement shouldn't be an obstacle.

Preparing the prenup well in advance of the wedding date can smooth the process. You'll also have a better chance of agreeing if you each approach the subject in a calm, caring way.

If you decide to skip the prenuptial, it's not the end of the world. A good estate plan can accomplish a lot of the same goals. And don't forgo an agreement in order to avoid talking about the hard stuff. Honest, open communication with your new partner can be very romantic.

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