What You Can Do with a Prenuptial Agreement
While the words prenuptial agreement can kill that pre-marriage romance, a prenup is smart financial planning. It is perhaps better thought of as a safety belt — when you ride in a car you don’t expect to get into an accident but you prepare for unforeseen adverse events. Similarly, with one in three first marriages ending in divorce, and 50% of second and third marriages coming to divorce, a prenuptial agreement is very simply, an element of prudent planning.
A prenuptial agreement is a contract between two people who are planning to marry that spells out how assets will be distributed in the event of divorce or death. In the event of a divorce, couples without a prenuptial agreement are risking that their financial future to be decided by a third party — a judge. Particularly in Michigan, which is an equitable distribution state, a judge divides the couple’s assets according to what the court deems fair (not necessarily equal). The judge considers the length of the marriage, the number of children, and the individuals’ age, health and job skills, as well as other factors.
While prenuptial agreements are really an insurance policy for any couple, there are a number of cases where having a prenup is of particular importance. These include the following categories:
- You have assets such as a home, stock or retirement funds
- You own all or part of a business
- You might be receiving an inheritance
- You have children and/or grandchildren from a previous marriage
- One of you is much wealthier than the other
- One of you will be supporting the other through college
- You have loved ones who need to be taken care of, such as elderly parents
- You have or are pursuing a degree or license in a potentially lucrative profession such as medicine
- You are likely see a big increase in income because your business is taking off, or that garage band you play in has just gotten a contract with a big record company
Not just any agreement is a valid prenup. A valid prenup requires:
- Both parties should fully disclose their assets. If either party is found to have hidden their assets from the other before entering the prenup, the entire agreement can be voided.
- The agreement should be signed well in advance of the marriage. Asking your fiancée to sign the agreement two days before the wedding, for example, could be seen as coercive, and therefore a basis for the court to void the prenup.
The discomfort of raising the idea of a prenuptial agreement is understandable. But the temporary discomfort is far outweighed by the protection you both receive with such an agreement. Please contact us if you have questions or need assistance drafting your agreement. Contact Boyer, Dawson & St. Pierre in Sterling Heights today at 888-559-4705.