If you are wondering whether a prenup is necessary, think of it as an insurance policy – just in case your marriage goes south. You most likely have your vehicle insured. It does not mean you wish the accident to occur, but if it does and your car is totaled, your coverage will protect you from potential losses.
A prenuptial agreement provides similar assurance since it is a legally enforceable agreement. With a prenup, you can establish how the division of assets will proceed if you decide to go separate ways.
When do you need one?
If you have significantly more assets than your spouse, it is advisable to get a prenup and clarify the financial rights in the marriage. Without one, you could lose considerable assets since it may be impossible to distinguish between marital and separate property or debt.
Another reason you should get a prenup is if you have children from a previous marriage. If you want to ensure they are provided for once you are gone, it’s best to have that in a prenup. Otherwise, your spouse may claim a large share of your property and leave the children with much less than you would have wanted them to have.
A prenup could also protect your business interests. For instance, a prenup can explicitly exclude a business from being considered community property when divvying the marital estate. Similarly, it can specify each spouse’s stake if you run a family business as a couple.
Drafting a proper prenup
Since a prenup is akin to a legal contract, it must be drafted right. Certain actions can void the agreement, rendering it unenforceable. It might leave you at the mercy of the sometimes unfavorable divorce laws and scuttle the objectives you sought to achieve with the prenup.
