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Congratulations! You are getting married!
Although the idea of a “pre-nup” or a premarital agreement may be accompanied with a stigma, there are many reasons why a pre-nup should be considered prior to marriage.
Couples often assume the purpose of a premarital agreement is to divide the assets. While this can be a pre-nup tool, it is not the sole focus. So why should you consider a premarital agreement? The answer to this question can be complicated. Let us first explain what can and can be included in a premarital agreement:
What CAN go into a premarital agreement?
|What CANNOT go into a premarital agreement?|
As you can see above, it is not the intent (nor is it permissible) of a pre-nup to encourage divorce. In fact, the top four reasons to consider for setting up a premarital agreement are:
As with anything, there are many myths, stigmas and rumours regarding premarital agreements. Don’t fall into one of these myth traps:
Prenuptial agreements are only for the wealthy. False! Pre-nups are for ordinary people. Given the high legal fees and stress involved in a divorce as well as peoples’ increasing financial independence, a prenuptial agreement can benefit just about everyone.
Prenuptial agreements are only useful for divorce. False! A premarital agreement in conjunction with estate planning documents can be a useful estate planning tool. It can be especially helpful if you have children from a prior relationship or have family heirlooms you want to keep in the family.
Prenuptial agreements are unromantic. False! Well, maybe not so false. There is nothing romantic about any legal document. However, the ability to sit down and discuss with your future spouse your future financial plans and expectations for the relationship will lead to a more solid foundation and bond than simply expecting your love to take care of everything.
Only men want prenuptial agreements. False! Pre-nups are a great way to set out your expectations for the relationship. For instance, a woman may insist that if she is going to stay home and raise the children, her pre-nup may include provisions to compensate her for this interruption in her career. Or, the woman may choose to include terms in her pre-nup that ensure part of her finances pass to her family rather than her husband.
Prenuptial agreements are expensive. False! Compared to the cost of an average wedding or an average divorce, pre-nups are a bargain. The best analogy is insurance: it’s a one-time expense for something you never hope to use… but if you ever need it, you’ll be glad you have it!
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