Couple’s spend many hours planning and a significant amount of money on their wedding, but personal finances and protecting assets deserve just as much attention and planning. When both parties are in agreement on discussing their finances, reviewing credit reports, and asset and liability information, long term asset appreciation and protection should take priority before the wedding day.
The most common way to protect assets is through insurance, and many times a prenuptial agreement (prenup). Although it’s not as much fun as discussing wedding plans, both have a place in pre-wedding planning when significant assets and liabilities are involved.
Traditionally thought of as a planning tool only for divorcing and retaining assets, prenups are a way to protect both spouses. Here’s how:
- When assets are combined, debt is also consolidated, making the spouse who came with no liability now legally responsible for the other spouse’s debt.
- Prenups offer a level of protection from creditors since they are a legal document filed through a court of law.
- Prenups keep the assets coming into the marriage separate but allow the couple to acquire assets jointly as the union continues, creating equal joint ownership and distribution upon liquidation, whenever that may occur.
- Both spouses should have their own attorney throughout the prenup process, helping to create fairness and full disclosure of all assets and liabilities.
- Prenups help to guarantee the assets coming into the marriage remain the sole property of the spouse owning them, regardless of the state of residence for both spouses. Any money and assets coming into the marriage after the union become available for the division if divorce should occur.
- Prenups can help protect an anticipated inheritance coming years later to one spouse, but only if it states in the agreement.
Deciding if a prenup agreement is right for you and your future spouse is a personal decision that shouldn’t be dismissed without consideration and consultation with an attorney.
Growing and protecting assets through financial advice for both spouses is at the core of our financial planning, as is disclosure and honesty between parties. I’m here to help both of you manage your own, and your combined assets, as you start your lives together regardless of your decision to utilize a prenup agreement or not.