Couple, their careers and their financial situations may change after marriage. While not particularly romantic, a prenuptial agreement may encourage couples to engage in financial planning and decide property division issues and other matters that may arise if they ever divorce.
Generally, a prenuptial agreement is a contract that sets forth the property and assets of each spouse and who will have the rights to those property and assets if the marriage ends. Typically, these matters include anticipated inheritances, trust funds and debt brought into the marriage.
Why a prenup?
Prenuptial agreements are often portrayed in the media as being restricted to celebrities and the affluent. But divorce can have serious financial consequences for most couples. According to one study, spouses who divorce after 50 face the likelihood of their wealth dropping by 50 percent. The lifestyle of women is particularly impacted by divorce.
Prenuptial agreements allow spouses to agree to a fair distribution of their assets that reflects their financial situation. For example, couples may decide on whether spousal support is needed if they are both employed. They can also modify these agreements during their marriage if circumstances, such as a spouse leaving work to raise their children or taking care of a sick relative, change.
Couples have more self-determination, within reason, through these agreements. If couples never entered a prenuptial agreement, they may have to negotiate these issues during their divorce when the circumstances are usually more confrontational and dealing with these matters cost more money. A court may also impose terms under Florida law that are less acceptable to the spouses.
A prenuptial agreement gives couples the opportunity to address often overlooked assets such as retirement plans. There can be serious long-term financial consequences because these plans are often divided during divorce.
Spouses can help assure that both spouses are protected through retirement and take measures if one spouse does not earn taxable income, such as obtaining a spousal individual retirement account.
Each party should obtain their own legal representation to assure that their rights are protected, and the agreement is not made under duress. An attorney can also help assure that the agreement complies with Florida law and is fair and reasonable.