A prenuptial agreement, or “prenup”, is a written contract created by an engaged couple that makes the process of divorce simpler, less costly, and faster. It spells out which property and debt each party comes into the marriage with and how property would be divided in a divorce.
Prenuptial agreements serve to protect and benefit both parties as well as the children in the event of divorce or death.
For instance, if one party owns real estate, bank accounts, and stocks prior to the marriage, these are listed in the prenup. Since most states hold that property owned by one person before the marriage remains with that person after divorce, this prevents litigation disputing who brought what property into the marriage. Also, it specifies which debts should stay with each spouse. In addition, a prenup may state how much alimony one spouse pays in the event of divorce.
Who Needs a Prenup?
Many people have the common misconception that prenups are only for the rich. While affluent couples opt for prenups more often, engaged couples of more modest means can also benefit from a prenup, and the cost of creating one is relatively inexpensive. In view of the large chunk legal fees can take from a divorcing couple’s assets, they can mean the difference between ending the divorce process financially secure or broke.
How Prenups Make the Divorce Process Less Painful
It’s no secret that many acrimonious divorces end with former partners fighting bitterly in court. However, no one really wins a divorce case. While one side may prevail on certain points, those involved, including children, pay heavy financial and emotional costs.
Though children may not lose money directly, they often suffer economically from their parent’s financial difficulties, resulting in involuntary changes in schools, less or no money remaining for higher education, and the loss of assets that they would receive when they come of age or as an inheritance.
A significant advantage of a prenup is it offers a clean and inexpensive way to pass property to children from a previous marriage. Because of this, a prenup offers benefits even if the couple never divorces. It can specify what the children from prior marriages receive upon the death of their mother or father. Without a prenup, children could be left with less, and nasty legal battles may ensure.
Money troubles and disagreements are a leading cause of divorce. Partners may not see eye to eye on financial decisions, and tensions are often exacerbated when they have different expectations coming into the marriage. A prenup forces the couple to discuss financial rights and obligations upfront and avoids misunderstandings that could lead to trouble later.
A prenup also helps diffuse divorce disputes before they even start. For instance, a prenup can specify how marital property is to be divided, preventing this issue from becoming subject to an expensive and prolonged court showdown. Likewise, it can specify alimony payments. However, many states prohibit alimony waivers and others require judges to scrutinize them carefully and overrule them in many cases.
Prenups also protect one partner from debts accrued by the other. For instance, one partner may have entered the marriage with a car loan and credit card debt. These obligations can be stated to belong to that spouse in the prenup.
What Happens If There Is No Prenup?
In absence of a prenup, state law determines the disposition of marital property in divorce. Marital property includes any new assets acquired during the marriage, such as a house, car, or cash. Generally, marital property is split. To divide physical assets, such as a home, it may need to be sold. In some states, the law also directs the division of property held prior to the marriage.
The law considers marriage a contract. As a result, without a prenup, it assumes that property acquired during the marriage belongs to both spouses and should be divided equally. In addition, debts incurred during the marriage are both spouses’ responsibility. Management and control of property acquired during the marriage are also shared.
A prenup can alter these standards to a certain degree. For instance, it can specify that a home belongs to one spouse and a bank account to the other.
Courts have become progressively friendlier towards prenups, and every state allows them. But divorce court judges still scrutinize them closely and can invalidate them if they are unfair or against state law.
To ensure a legally sound prenup, each party should have it reviewed by their attorney.
While a prenup cannot take the emotional sting out of a divorce, it can make the process smoother, less costly, and faster. So often, court battles over property achieve nothing except increasing legal fees and dragging out the process. A prenup allows each partner to obtain a fair settlement and move on with their lives with minimal acrimony.
The Divorce and Family Law Offices of Tower Karson Law in Livonia has the extensive experience and knowledge in all aspects of the divorce process and family law. If you have questions about a prenuptial agreement, the divorce process or are facing a family law issue contact our Michigan divorce firm and speak to an attorney today, Free!