Pursuing a prenuptial agreement is more than just talking out terms with your spouse; it is a legal process with many nuances you might not think about from the onset. You will want to make sure you’re well informed and well represented before thinking about signing a prenup. Read on to learn more about:
- Important Considerations if You are On the Fence About a Prenup;
- The Sunset Clause: An Important Option for an Optimistic Future; and
- Other Clauses for your Future’s Betterment.
To Prenup or Not to Prenup: Making the Decision
There are many factors you may consider before signing a prenup. For one, prenups are financial in nature; if you want to sign a prenup, you need to be ready to commit to being on top of your records. This may include managing debts, controlling assets, and overall handling your inheritances and payments independent of your spouse.
But! This may not be the path for you. In fact, it is best to look over all your options before making the legal decision to sign a prenuptial agreement.
You may want to consider a prenup if you…
- Earn a sizable income and may grow wealthier: if you foresee yourself gaining wealth over the course of your career, you can secure said wealth via a prenup;
- Do not earn a sizable income and want to ensure you will land on your feet in the event of a divorce: of course, the other side of the coin may apply in cases where you may not make more or as much as your spouse. Don’t want to chance getting nothing in a divorce? Make it a part of your prenup;
- Are a business owner: protecting your business during and after your marriage is crucial, and including it in your prenup can ensure it stays in your name and out of distribution talks; or
- Don’t want to see your life torn apart by a divorce: signing a prenup can save you and your spouse a lot of potential time and money by separating and protecting assets from the get-go. In a way, a prenup may ensure the vitality and fruitfulness of both of your futures.
However, a prenup may not be for you if you…
- Do not want one: yes, it might sound like a simple reason, but if your soon-to-be spouse wants a prenup and you don’t, do not get one. These are best pursued mutually and could involve undue legal stress if you do not want one in the first place;
- Cannot afford or do not want to pay legal fees; Another valid reason is if you do not wish to risk accruing premarital debts paying money for legal consultation and representation. A prenup is best worked out with top-notch legal support, which requires some financial investment. You do not want a shoddy and poorly represented prenup knocking at your door in the event of a divorce; or
- You do not foresee needing to cover assets: this may be hard to predict, but if you think or know you will not be coming into any large inheritances or substantial salary bumps, a prenup might be unnecessary.
Contacting and talking to a lawyer about your options is a solid first step to determine if a prenup is the right choice for you.
The Sunset Clause
A prenup is not just a document listing assets and debts. There also exist a few opportunities to add clauses that set limits on the prenup.
If you are concerned about any of the reasons mentioned above for a prenup, you may want to bring up a sunset clause as an option, which sets a date when your prenup will expire. The idea here is that the need for a prenup may fade over time—whether that means you grow in confidence, a divorce will not happen, come into an inheritance eventually, or become business partners with your spouse.
There are necessary risks with sunset clauses. If your spouse waits to divorce you until the prenup expires, they may be entitled to a full, equitable property distribution under Maryland law. Anything included in your previous prenup that qualifies as marital property immediately becomes fair game.
However, if you think having a provisional prenup may help promote stability and equity within your relationship for the first few years, adding the sunset clause may help you shed the prenup eventually while keeping its conditions in the short term.
Additional Clauses of Interest: Being Thorough in case of Divorce
There are other clauses you may choose to include in your prenup as well that could affect the outcome of your marriage.
To prepare against divorce, you may consider an alimony waiver clause. A quick refresher for those who do not know: during a divorce, the earning spouse may pay the spouse who earns less or demonstrates significantly more need for dependence post-divorce spousal support until they are able to live independently. This is called alimony.
There are cases in prenups where you can build in an alimony-waiver for later in life where your spouse agrees to not accept any alimony in the event of divorce. A clause like this may also adversely affect your marriage and cause additional anxieties for the lesser-earning spouse. Instead of an alimony waiver, you may consider building in a plan to your prenup outlining alimony expectations come divorce.
In addition, you may want to prepare for further financial gain later in life that you don’t otherwise expect. A divorce treats assets as marital or non-marital depending on when they were acquired; with a prenup, you legally define limits where certain assets stay non-marital and become marital. For example, if your spouse invests in the stock market before your marriage but does not see rapid growth until a few years into your marriage, you can set the stock’s increase as a piece of marital property in a prenup. This may help even out the playing field in a divorce and allow you and your spouse to cover all bases when it comes to property distribution.
If you or your spouse have questions about the process of drafting a prenup, contact our offices for a free initial consultation. A prenup may end up having a major impact on your life; get it done the right way with an experienced lawyer at your side.