As we’ve discussed in previous blogs, prenups get a bad rap. They are a misunderstood and wildly underutilized family planning document. The common misconception is that they are a plan for a future divorce—preparing to fail, some might say—when the truth is this document allows you and your future spouse to discuss and craft effective plans for how you will manage finances and property throughout your marriage.
What Should be Included in a Prenuptial Agreement
Misunderstandings and disputes over finances are one of the leading causes of failed relationships, and prenups are a fantastic and practical way to address your new family’s financial future and ensure you and your soon-to-be-spouse are on the same page.
Below we have outlined seven important topics you and your fiancé may want to include in your prenuptial agreement:
- Premarital assets and debts
Your prenup should establish how property and debts that were owned by either spouse before they were married will be treated after the couple is wed. If one spouse bought and owned a vehicle before the marriage, will the other spouse now jointly own the vehicle? If one spouse had significant student loan debt, will he or she be solely responsible for that debt, or will both spouses be required to pay it off? These are important questions to answer before you get married.
- Children from previous marriage
Prenups should involve children from previous relationships. You may want to establish how those children will be provided for, and include instructions for inheritances to those children in particular. The spouse will generally have the first claim to an inheritance when the other spouse passes away, so you may need to include specific provisions in your prenup that guarantee an inheritance to children from a previous relationship.
- Marital assets and debts
The State of Alabama treats most assets and debts acquired during a marriage as jointly and equally owned by both spouses. If there are certain assets or debts you plan to accumulate in the future during your marriage, but you want to keep separate, you have to provide for those debts and assets in your prenup.
- Marital responsibilities
Your prenup can and should define your expectations with regard to marital responsibilities. You cannot include non financial responsibilities like who will take out the trash every week, but you can detail who is expected to pay bills, file tax returns, how bank accounts and savings accounts will be handled, how you will spend money or obtain credit, how investments will be handled, and much more.
What will you do if your job requires you to transfer to a new state? Will one spouse be a stay at home parent when you have children? Clearly define your expectations with regard to work and income in your prenuptial agreement.
- Family property
If there is certain family property like an heirloom or other inheritance which one spouse wants to remain on their side of the family, they can specify this in a prenup to ensure that it will pass on to biological children or another blood relative on their side of the family.
- Property division in divorce
Your prenup may also define how your assets and debts will be divided if a divorce ever occurs. This is particularly important for those who own businesses if they want to ensure they will maintain control of that business in case a divorce ever occurs.