The millennial generation has embraced the protective powers of prenuptial agreements more than previous generations. This could be due to several factors, including the generation’s propensity for getting married later in life and being intentional with family and business decisions. A prenuptial agreement is not only for the ultra-rich or celebrities. It is a financial planning tool which can be valuable to couples whether they ever get divorced or not.
Why You Should Consider a Prenuptial Agreement
Prenuptial agreements or “prenups” have gotten a bad reputation because they are often associated with “gold-digging” celebrities. However, the reality of using a prenup is much different then television and movies would have you believe. A premarital agreement allows both parties in an engagement to make decisions about their assets and property before getting married.
When a couple sits down to create a prenuptial agreement, they must put everything on the table, so to speak. Each person reveals his or her financial scenario including bank accounts, income, debts, property, and assets. This allows both people in the relationship to be in the loop regarding finances. Studies show that disagreements about money are one of the leading causes of divorce. Having a frank discussion about finances before getting married lessens the chance that a surprise debt, hidden bank account, or another unexpected financial discovery leads to arguments later. Contrary to popular belief, using a prenuptial agreement may make a couple less likely to divorce because they started their marriage with honesty and transparency regarding finances.
In the Event of Divorce, a Prenuptial Agreement is Invaluable
Though it is unpleasant to think about as a newly engaged couple, divorce can happen. Studies show that about 40-50 percent of marriages end in divorce, so it is wise to be prepared for this possibility. If a couple does get divorced, a prenuptial agreement will contain arrangements that the couple made regarding marital and separate property, debts, spousal maintenance, retirement accounts, real estate, investments, family-owned businesses, inheritance rights, and more. Prenuptial agreements can also direct how a partner might be compensated for leaving the workforce to care for their children should the couple get divorced. Couples who get divorced without a prenuptial agreement are generally far less prepared about how their marriage ends and how assets, property, and debts are divided.