Often times, individuals feel like asking their soon to be spouse to sign a premarital agreement may be disrespectful, or that even having a conversation about signing one may be awkward. However, premarital agreements, also referred to as prenuptial agreements, actually offer a lot of benefits to couples. While couples contemplating marriage should certainly shoot for the goal of remaining married, unfortunately, life happens, and relationships get strained. Premarital agreements are a way to “hope for the best, and expect the worst.” This blog looks at some of the benefits premarital agreements can offer to prospective spouses.
Full Disclosure. Many couples enter into a marriage without knowing the full extent of their significant other’s financial situation. One of the requirements for a valid premarital agreement is a full disclosure of assets and debts prior to the marriage. This gives individuals an opportunity to know the financial welfare of the other, as well as knowing how much debt, if any, the other is in. Full disclosure can help you from getting blindsided by the other’s financial situation upon marriage.
Protection of Assets. A common benefit, one you probably know of, is asset protection. A premarital agreement is a contract. As such, parties are free to contract with each however they so choose, albeit, subject to a few exceptions. This allows individuals to protect the assets they bring into the marriage by coming to an agreement beforehand. In addition, individuals can also protect future assets, such as inheritance.
Estate Planning. A premarital agreement is not only a tool to use in instances of divorce, but it is also a tool individuals can use as part of their estate planning. Being a contract, premarital agreements oftentimes trump state estate laws. Therefore, individuals looking to ensure their property is distributed upon their death according to their wishes should consider a premarital agreement as a way of helping accomplish this goal.
Prevent the State from Dividing Your Property. Upon divorce in Indiana, courts presume that a 50/50 division of marital assets is just and reasonable. Marital assets are considered to be all assets, regardless of whether they were acquired before or during the marriage, and regardless of whose name the asset is titled in. A premarital agreement offers a great way to protect your property upon divorce, while also avoiding interference by the court. Another bonus is that less interference by the court also tends to mean less money spent on court fees and attorney bills.
Premarital agreements offer individuals a lot of benefits, from asset protection to estate planning. But remember, premarital agreements are contracts. As such, they must be carefully drafted to include the necessities of a binding contract including full disclosure; in a larger estate, this is typically best handled by counsel for each side.
This blog post was written by attorneys at Ciyou & Dixon, P.C. who handle the full spectrum of domestic and estate planning issues, ranging from premarital agreements, challenges to premarital agreements, estate planning, divorces, and appeals. This blog is written for educational purposes only. It is not intended as legal advice or a solicitation for services. It is an advertisement.
