Posted by Dennis Jao

Pros & Cons of a Prenuptial Agreement

Pros & Cons of a Prenuptial Agreement

Getting ready to tie the knot with your heartthrob is a lifetime commitment that involves the heart, soul and finances. 

Without a doubt, both parties will deal with finances a lot, from planning the big day to budget for the purchase of your first house. We know that a prenup agreement is not the most romantic thing to discuss, but it is one of the money conversations an intending couple should have. 

With a prenuptial agreement, both parties can plan should there be a separation, divorce, or dissolution of the marriage.

 

What is a Prenup?

A prenuptial agreement is a legal contract established between two intending couples which are drafted before marriage. Here are details it might include:

  • Mode of allocation for properties like investments, business, home, etc.

  • Terms for alimony

  • Who takes care of debt incurred in the marriage

  • A “sunset clause” that reveals an expiration date for such prenup agreement like 15 years of marriage, for instant

A prenup signed under duress is not valid. The agreement must be voluntary, and both parties need to disclose properties and financial obligations completely.


Pros and Cons of Prenuptial Agreement 

There are some pros and cons of a prenup agreement one needs to consider before considering the path. 


Pros of Prenuptial Agreement 

  1. Finances are disclosed Immediately

The foundation of a prenup is for both parties to lay bare all the finances they have. This involves the assets and liabilities that they have. It presents the opportunities to lay the foundation for deciding how finances will be shared should there be a separation or divorce. 

Both parties need to supply their bank information, car loans, mortgage titles to the attorney. When such information is known to the parties involved, chances of surprise reduce significantly.

  1. Helps Protect Loved ones and Properties

For every business that you have nurtured before marriage, and you want to protect it should there be a divorce, a prenuptial agreement can help. 

You might have properties that your parents are living in. A prenuptial agreement will ensure that your parents get to retain the property and not lose the home in case the marriage did not work as planned. 

  1. Set Expectations on Time

Divorce is draining, messy, nasty, confusing and time-consuming. A prenup helps establish a solid plan for the division of the asset. Since the process has been decided already, it can be comforting to know assets are protected during a stressful time. 

With a prenuptial agreement, the wife cannot lay claim to the husband's belongings and vice versa. The agreement allows everyone to maintain their asset.

 

Cons of a Prenup agreement 

  1. Prenup feels like a transaction.

There is a superstitious belief that a prenup sets your marriage on the path for divorce, and some people even believe that it kills the romance in the union. This makes it essential to discuss the possibility of a prenup early in the relationship. In other words, discuss it as soon as possible before the wedding plan gets knee-deep.

Yes, it is unromantic, but think about the protection you get for yourself and your asset. 

  1. There are legal fees.

In setting up a prenuptial agreement, the parties will have to seek legal counsel, which might be individual. The lawyers will have to guide their counsel on the terms of the contract, how it might affect you, the assets, and your family should there be a divorce.

The legal fees can range between $1500 and $2000 or more for complex situations. This fee varies depending on how complicated your problem is and your location. 

  1. The terms might favour only one Spouse.

If the terms and clauses used in the prenup were poorly stated, or one of the parties had a drastic change in financial situation from the time of first drafting till its outcome, the prenup will be imbalanced. 

One might not be able to predict future circumstance or income that might affect how fair a prenup is. This makes it essential to seek independent legal review.


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THANKS FOR VISITING. 

Dennis Jao
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