Thinking of getting married?
Before you take that step, be sure you understand the financial obligations that are imposed by state law during the marriage which continue even if the marriage does not work out.
A Premarital Agreement is an agreement between parties about to be married that supplements or revises the legal rights and duties that the state laws. A Premarital Agreement does not impact religious duty or romantic expectations. Reaching a premarital agreement requires a couple to explore their financial expectations for the marriage and upon death and reaching a clear understanding of what state law requires. A premarital agreement helps future spouses identify their common ground and their differences, consider their options, and structure an agreement acceptable to both of them. A good premarital agreement is accomplished by cooperation and joint problem-solving. The most often cited benefit of a premarital agreement is the avoidance of litigation and financial ruin in the event of divorce.
Who needs a Premarital Agreement?
Unless you can guarantee that you and your future spouse will never have a serious dispute about financial matters in your marriage, or when one of you dies or if there were a divorce, then you need one! Here are a few of the specific common situations that are well served by a Premarital Agreement:
- The Bride or the Groom has children or grandchildren from a previous marriage whom they wish to benefit with insurance or in their Will or Trust. Without a premarital agreement that a gift can be defeated by spousal rights at death.
- The parties are glad to support each other, but do not want their money to go to the step-children or in-laws in the event of death of their new spouse.
- One party holds family money for taking care of elderly parents or siblings with disabilities.
- The Bride or Groom has accumulated significant property outside the marriage that they are reluctant to share immediately.
- Both parties agree that children of the marriage should be supported through college or attend private school, even in the event of divorce.
- One of the parties is pursuing a degree or license in a field such as medicine, and the other party is giving up his or her own career to support the couple through the student’s extended education program.
- One party is in a family business that he or she (and the business owner’s family) wants to “keep in the family.”
- One of the parties is giving up developing a career in order to be a “stay-at-home” parent.
- One party has a home that he or she does not want to lose under any circumstances.
- One of the parties is involved in a speculative business venture that may result in a significant increase or loss in wealth.
- One party will lose permanently his or her right to a social security benefit, retirement benefit, or alimony from a prior spouse upon marriage.
- For older Brides and Grooms, one party may need long term care and the other party’s funds may be spent on that care.
- One party stands to inherit property, but the parents or grandparents are unwilling to risk giving that inheritance to the couple because they are uncertain of how the marriage will turn out. A Premarital Agreement can assure parents or grandparents that a gift to one party will not be lost to a new “in-law” in a divorce.
- One of the parties has already suffered through a divorce that was emotionally and financially devastating, and they want to avoid repeating the experience.
- One party has financial or tax problems; the other party wants to avoid liability.
- Parties have differences of opinion about how money should be spent or saved.