What kind of couple gets a prenuptial agreement? Many people think of prenups as something for the wealthy or famous or for couples who are not confident in their marriage working out and want to make an eventual divorce or dissolution easier. While it is true that people who fall into those categories often benefit from a prenup, they are not the only ones who can.
Having an agreement doesn’t mean that you are planning for your marriage to fail. On the contrary, it means you are willing to discuss, and work through, difficult financial issues—the very kind that can cause marital struggles if left unaddressed. In other words, by forcing you to do the hard work up-front, negotiating a prenup can help you lay the groundwork for a successful marriage.
What is a Prenup?
A prenuptial agreement is simply a contract between two people who are planning to marry each other. The agreement outlines the future spouses’ rights and responsibilities, generally with regard to financial issues. A prenup typically addresses the resolution of differences and the disposition of premarital or marital assets or debts in the event of a divorce or death.
A couple can, for instance, agree that if they divorce, neither spouse will receive spousal support (alimony). However, a couple cannot make an agreement regarding future child support; child support is a right that belongs to the child(ren) and cannot be contracted away by the parents.
Most couples can benefit from the process of negotiating a prenup, but there are some for whom it is especially helpful, or even essential. Couples who should consider having a prenuptial agreement include:
Marriages in Which There are Children From a Previous Relationship
When one or both spouses have children from a previous relationship, especially when those spouses marry later in life, they may be concerned about protecting their children’s inheritance. Having an estate plan is essential, but a prenuptial agreement plays an important role, too.
If each spouse came into the marriage with their own assets, they may want to leave those assets to their children. But it is very difficult to disinherit a spouse in Ohio, even with an estate plan. A prenup allows spouses to “override” Ohio’s statutory elective share laws and leave assets to their children instead of a spouse.
Even if the spouses want to leave each other part of their respective estates, having a prenup can reassure adult children that their inheritance is protected and promote better relationships among the blended family.
Marriages in Which One or Both Partners Have Been Divorced
There is no teacher like experience, and what divorce teaches most people is that they never want to go through a contentious battle over assets again. A person who has been burned in one divorce may not plan to divorce the second time around but has the hard-earned experience to know that it makes sense to plan ahead for the division of assets, just in case. Outlining what belongs to one spouse alone can be helpful if disaster strikes, making the divorce process less contentious.
Marriages in Which One Partner Has Much More Debt
If one spouse comes into the marriage with significant debt, such as from credit cards, medical bills, or student loans, a prenuptial agreement can ensure that in the event of divorce, the other spouse isn’t unfairly burdened.
Marriages in Which One Partner is Wealthier
If one spouse enters the marriage with significant wealth, especially family wealth, they may want to ensure that their spouse doesn’t walk off with that wealth in the event of a divorce—or they may simply want reassurance that their partner is marrying them for love, not money. A prenup agreement can help both partners understand the scope of their finances and clarify their respective rights and expectations.
Marriages in Which One Partner Expects a Large Inheritance
In Ohio, an inheritance received during the marriage is generally considered “separate property,” not subject to division in divorce. However, if inherited assets are “commingled” with marital assets, they lose their separate nature and could be considered marital property. Commingling can happen simply by depositing a check from the estate into a joint bank account, and then balances falling below that deposit, or marital deposits mixed in, or not being able to trace the deposit back to an estate. The terms of a prenup can be used to help keep separate assets separate.
Marriages That Expect One Partner to Be a Stay-at-Home Parent
The choice to be a stay-at-home parent can be the right one for a family, but it can cause one’s career and earning potential to take a serious hit. A prenuptial agreement can recognize the sacrifice that a stay-at-home parent would be making, and plan to compensate that parent for their sacrifice either during the marriage or in the event of divorce. For example, the spouse working outside the home could agree to make regular, mandatory contributions to an IRA for the stay-at-home spouse.
Marriages in Which a Future Spouse Owns a Business
If one or both future spouses are business owners, a prenup is essential. Depending on the business structure, an increase in the business assets or value during the marriage could be subject to division in divorce. If the owner of the business has co-owners other than their spouse, those co-owners could be affected by a future divorce. A prenuptial agreement can prevent a divorce from damaging the business or tying up business assets by specifying the non-owner spouse’s rights, if any, to business assets. A prenuptial agreement can also save money in case of a divorce by not having to engage an expert for a business evaluation if values are clearly spelled out in the agreement.
If the spouses are in business together, chances are they would not want to continue as such in the event of divorce. Negotiating a prenup to deal with the disposition of the business in the event of divorce could save the business, preventing assets from being lost to legal battles and clearly spelling out the rights and responsibilities of each party.
Marriages Who Value Their Privacy
Most prenups deal primarily or exclusively with financial issues, but they can cover certain other areas as well. If one spouse is well-known, or just very private, he or she might want a prenuptial agreement that specifies that neither spouse will intentionally disclose or publish certain types of information about the other or about the marriage. Future spouses can also agree to resolve any disputes, including divorce, in a private forum such as mediation or arbitration.
If this blog post has you wondering, “Should I get a prenup?” you should consider scheduling a consultation with an experienced prenuptial agreement lawyer. A prenup lawyer can explain what is needed to make a prenuptial agreement valid and enforceable, and what you can and cannot include. If you have questions about prenuptial agreements in Ohio, please contact Melissa Graham-Hurd & Associates.