Protecting any assets you enter into a marriage with has become a rising priority for newlywed couples. A 2021 survey found that 20 per cent of couples sign a prenuptial agreement – a dramatic increase from the 1.5 per cent 40 years ago.
There are many valid reasons to want a prenuptial agreement before your upcoming big day. If your marriage is just around the corner, it may be worth considering a prenuptial agreement before saying “I do.”
What exactly is a prenuptial agreement?
A prenuptial agreement, or prenup, outlines the ownership of belongings and what will happen to them in the event of the breakdown of a relationship. It offers a level of protection against inheritance, savings, property, children, businesses and any outstanding debts.
While not legally binding, this contract is signed by both parties before the marriage takes place and is designed to protect each person’s financial interests. A lawyer will advise you on the process and help you draw up the agreement.
When might a prenuptial agreement be needed?
Prenups can be used for a number of reasons and anything can be included in the agreement. They aren’t just for the super-rich and famous – they’re about protecting your personal belongings that you take with you when you enter a relationship. Having a prenup in place also ensures you have a plan for any assets you may acquire during this relationship.
Scenarios where a prenuptial agreement may be ideal include if one partner owns a business, wants to protect pre-marital assets, or even wants to cover the family dog. Everyone should consider a prenup, whether you’re entering a marriage or cohabiting with your partner.
While prenups can act as a safety net, they are also regarded as a sensitive issue for some. Understanding the reasons behind the agreement can help you learn how to respectfully ask your partner for a prenup.
What can be included in a prenuptial agreement?
The agreement will determine what happens to certain assets in the event of a divorce, so what you include depends on your independent financial situation. It can also help you consider your potential future asset situation.
Debts
If you enter into a marriage with debts, then your spouse could be liable to pay them even when they aren’t theirs. This includes credit card debt and student loans, and your prenup should identify who is paying what in the event of separation.
Property
Whether you are establishing what happens to a marital home or business property, it is worth including this in your prenuptial agreement, as these assets can often be hard to split 50/50.
Child maintenance
With children involved, this is often a common clause. Prenups can protect any children from a previous relationship, ensuring certain assets are reserved for them while protecting their inheritance rights. Child maintenance can also relate to spousal support payments.
Inheritance
If you or your partner is due to receive any inheritance, including money or assets, a prenuptial agreement ensures any received assets stay with the intended recipient.
Seek legal advice
Perhaps you’re seeking advice on how to draft an agreement, or you’re unsure on which assets you can protect. Family lawyers are experts in prenuptial agreements, and they will remain by your side every step of the way.