Prenups Clarify "Yours, Mine, and Ours"

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For most of us, the term "prenuptial agreement" brings to mind the Donalds and Melanias of the world – the ultra rich and famous who seemingly enter into a marriage already planning for divorce.

Unfortunately, that perception prevents many people from even considering a prenuptial agreement when they could benefit from having one. But that's begun to change. Simply stated, a prenuptial agreement, or prenup for short, is a legal contract between two people planning to marry. A prenup sets parameters for the future in terms of how to distribute assets. Partners also can use a prenup to spell out how they'll handle financial matters while married.

Whatever the purpose, a prenup isn't a topic to bring up after you've already mailed out 300 wedding invitations. Rather, couples should discuss a prenup early on, even before they set a wedding date. The ideal couple is saying, "We each have financial issues we want to deal with. We're going to disclose all our assets and liabilities. And we're going to talk about our future."

Today, people who are remarrying make up a sizable portion of those writing prenups. Or they're people in their late 30s and 40s marrying for the first time who already have acquired some assets and may or may not have other people they want to remember in their wills. A prenup can be part of their estate planning.

Prenups can be useful to keep property separate rather than joint, to handle a family business, to create special arrangements for retirement benefits, to draw up an agreement if one of you is putting the other through college, to designate who will pay which bills after marriage, and much more.

But a prenup can't restrict rights to child support, custody, or visitation. In some states, spouses can't waive their rights to alimony through a prenup. Also, personal agreements – such as laying out rules about who will do various household chores – don't belong in a prenup and even may cause a judge to question the seriousness of the whole agreement.

Not all couples need prenups. If you get divorced or one of you dies, your state's marital laws may divide or transfer your property exactly as you'd want it done anyway. Then it's pointless to spend time and money on a prenup.

Still, deciphering what your state's laws will allow can be difficult. That's where expert legal advice is critical. State marital laws vary enormously. Talk to an attorney who knows the intricacies of your state's laws. He or she can fashion a prenup that's legally enforceable and accomplishes what you want.

In fact, courts often view with suspicion any prenup drawn up without legal consultation. To a judge, that's a red flag indicating one party may be trying to take advantage of the other. That's also why each party needs a separate attorney. One attorney can't represent both parties' best interests at the same time.

Attorneys? Documents? Legalities? You may be left wondering what happened to the romance of getting married. In reality, marriage is as much a financial relationship as it is a romantic one.

© 2005 Credit Union National Association Inc. Information subject to change without notice. For use with members of a single credit union. All other rights reserved.

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