What is a Prenuptial Agreement?
A prenuptial agreement, or prenup, is a contract entered into by two people with anticipation of getting married. One of the main benefits of an enforceable prenup is to help the couple establish how assets will be divided should the marriage not work. Creating a prenup before the marriage helps to alleviate stress and frustration should the relationship fail.
Another important aspect is to list each party’s debts and stipulate how they will be handled should the marriage fail. Both parties are to be transparent regarding their assets and debts and create a plan that they both agree on for the future.
Though broaching the topic of a prenup can be difficult, having one in place that each party can rely on can take some of the tension off of the couple regarding finances through the life of the marriage.
What Situations Best Apply to Needing a Prenup?
A prenup may not be the best fit for everyone. Below are some of the common reasons why a prenup would be especially beneficial to a couple planning to marry.
If there are children from a previous marriage – including specific wording within the prenup regarding the children from an earlier marriage is a great way to ensure all children before or after the marriage are appropriately accounted for and taken care of should you choose to make financial decisions regarding them.
If there are significant assets – if either or both of you have substantial assets or plan to in the future, having an enforceable prenup in place is a great way to agree on how those assets will be divided should a divorce occur.
If either party owns a business – if either party or both parties own a business and have expressed that they wish part or all of the business to be kept separate from personal assets, you can work with your attorney on how to achieve this per Arizona laws.
One party has substantial debt – similar to the significant wealth of either party; if one of the parties has substantial debt, the couple can decide together how that debt would be handled should the marriage not work out.
One party is much older or has reached retirement – this can mean that retirement income may change the outlook of the couple’s finances. Addressing this in a prenup can be beneficial to both parties.
One party is supporting the other through college or furthering their career – if one of the parties needs to make significant sacrifices to ensure the other can complete their college or training, it may be beneficial to ensure both parties are fairly set in the future.
What Makes Community Property Laws Important in Prenuptial Planning?
In some states, such as Arizona, all property acquired during a marriage is considered community property, meaning the couple will split up the assets equally should they divorce. Community property also applies to debts that the couple acquires. Some states view assets and debts differently. With the community property laws in place, it may sway a couple one way or the other when determining whether or not the prenup is a priority.
Considerations should be made for significant debt that is anticipated or assets by either party during the life of their marriage. If an inheritance is anticipated, for example, this may also need to be addressed within the prenup. Speak with your experienced attorney to ensure that both you and your expected spouse are protected.
Common Mistakes Made When Creating a Prenup
It’s essential to avoid these common mistakes to ensure that your prenup is enforceable.
Signing under duress – if either party feels coerced or rushed into signing the prenup, the document can be invalid. Aim to have the prenup finalized and signed as required at least a month before the wedding date. If the document is created within days of the wedding, a judge may see this as improper planning and unfair to one or both parties.
Fairness – if the prenup is obviously favoring one side or the other, without a valid explanation, a judge may review the document and choose not to honor it. Review both parties’ debts and assets with a lawyer to ensure that you create an enforceable prenup.
Misrepresentation of assets/debts – if one of the parties is found to have misled the other regarding finances, it can create issues with the prenup. Both parties should be completely transparent when discussing finances going into the prenup agreement.
Waiving child/spousal support – if the prenup specifically stipulates that support is to be waived and not granted under any circumstance, a court may deem this unrealistic and choose not to honor the agreement.
Review your prenup with an experienced lawyer to determine your options and ensure you have a valid prenup.
Planning Ahead Now Creates Clarity
You may have never wanted to create a prenup. For some, it’s the thought of planning for failure that soon-to-be spouses just can’t get past. The truth is, the probability of divorce is high, and if you can come to an agreement now while you have mutual respect and goals for each other, it can lessen the load at a time that may be stressful for both parties.
Our team provides determination, compassion, and clarity for our clients. We help you look into the future and plan for things you may not have considered. Whether you are planning to get married, get a divorce, or prepare for your family’s future and legacy, we are capable, kind, and ready to assist you. Contact our office today at (623) 267-0026 to learn more.
We look forward to serving you.