Protecting Your Finances With a Prenup

If you're getting married, you've probably had people ask if you're getting a prenup, more formally known as a prenuptial agreement. Prenups used to be only for wealthy people, but now ordinary people are signing them, and I want to talk about why!

I've been a forensic accountant for more than 25 year, and I've been through hundreds of divorces with clients. Because of my experience in the divorce world, I recommend prenups to everyone. Regardless of whether you have and your future spouse have a little or a lot of money and assets, signing a prenuptial agreement is vital to securing your future.

No one enters into a marriage with divorce on their mind, but this is a reality for nearly 50% of first time marriages and the divorce rate increases with subsequent marriages! 

What Is a Prenup? 

A prenup, or prenuptial agreement, is a contract that is signed BEFORE you get married. (Thus the "pre" part of the word.) The contract between you and your future husband specifies what is going to happen with the money if you ever get divorced. It sounds simple and it can be! It can also make or break your financial future in the event of a divorce. 

What Can a Prenup Help You Protect?

There are some key assets and resources a prenup can help you and your future spouse protect. It may feel like a prenup is one-sided or that you or your spouse are trying to get one over on each other, but truthfully a prenup protects both of you.

Think about protecting the following assets with your prenup:

• Bank or investment accounts that you accumulate either before or during the marriage
• Real estate (for example, if you own a home or rental property before you get married)
• An inheritance you may get sometime in the future

The prenup should also address the issue of spousal support (also called alimony or maintenance). You want to know if one of you is going to be on the hook to pay support, and if so, how will it be calculated. When your attorney is drafting this part, you will want to think about how your career may be impacted if you take time off work to raise children, and how that will factor into spousal support that you would receive. It's not always easy to jump back into the workforce, and it often takes time to build your earnings back up.

You can also address issues like who pays which bills during the marriage or what financial obligations you have to each other while you're married. It is a great way to set forth ground rules regarding the money.

Who Can Draft a Prenup? 

It is important that both you and your future spouse have legal representation when you are drafting a prenup. Your prenup will not be valid unless you each have an attorney representing you.

You need to know that both of your interests are being looked out for and that all angles are being covered. Different states have different requirements and you will need to have your attorney inform you of them. It is vital to have an attorney you trust and who you feel will have your best interest at heart. 

A Prenup Can Give You a Plan

A prenup can help outline many decisions you would otherwise have to make during your divorce process. Below are some ways a prenup can help remove any confusion or conflict from your divorce. 

• How assets will be divided in the event of a divorce
• What will happen with debt from your marriage 
• How taxes will be filed 
• How accounts will be distributed 
• How expenses will be divided during your marriage - This is especially important if you will be splitting expenses unequally.

A prenup can't cover issues relating to child custody, child support, and visitation. This is not allowed and will have to be decided during your divorce.

Get Your Marriage Started on the Right Financial Foot

There is a lot to think about when it comes to your finances in marriage, which is why I put together the Marriage Money Guide. The guide not only walks you through more of the details you have to think about regarding a prenup, it also helps you figure out how you're going to manage the finances in the marriage, how to have discussions about money with your fiance, and how best to protect your finances.

I know that this guide can set you up for a lifetime of financial security from the moment you say "I do."