Getting engaged usually sets the ball rolling for a long “ to-do” list such as planning your wedding, finding the perfect honeymoon destination, creating a registry and generally looking forward to a wonderful marriage.
However, one item most soon-to-marry couples overlook is signing the prenuptial agreement. But how do you know you need one in the first place? Well, to answer this question, it helps to start by understanding what a prenup is and the implications of having one.
Understanding the role of a prenup in marriage
Basically, a prenuptial or premarital agreement is a contract that lays the financial terms of the marriage. This legal document is designed to separate personal property from marital property should the marriage end in a divorce. Without a prenup, you risk giving up a huge chunk of your hard-earned wealth during the divorce. So how can you figure out if you need to sign a prenup before tying the knot?
Getting a prenuptial agreement before getting married
Generally, signing a prenuptial agreement might be a prudent idea if any of the following situations apply to either party:
- If you are coming into the marriage with a significant amount of assets like real estate, bonds, stocks or bank accounts
- If your spouse has a significant debt in their name
- If either party has children from a previous relationship
- You expect to receive a significant amount of inheritance
Besides these four situations, a prenuptial agreement can also help clarify certain issues regarding how you and your spouse will handle money. Some of these include whether you will have joint or separate bank accounts as well as how you will handle joint assets during the divorce.
A prenuptial agreement might not be the most romantic thing when planning a marriage. However, done right, this legal document can offer several benefits to both parties.
