Many Texans think of prenuptial agreements as documents that only wealthy oil magnates, football stars and country singers draw up to protect their significant assets in the event of divorce -- particularly if they marry someone with far less money than they have. However, prenups are about far more than assets.
One of the authors of a book called "The New Love Deal: Everything You Must Know Before Marrying, Moving In, Or Moving On!" says that a prenup doesn't have to be just about planning for a potential divorce. A key part of it, she says, is having an honest communication with your partner about finances before embarking on marriage.
This is something that's important regardless of your income level. She notes, "Just the very act of discussing and trying to come to an agreement…will help reveal what you have in common, and what might become a 'dealbreaker.'"
She says it is preferable to decide potentially-contentious issues like finances "while you are most in love and most in tune with each other" rather than at the end of a marriage when they can be used as power plays by one or both spouses.
A prenup can include not only stipulations about the division of assets but also the responsibility for debt. Many people bring debt into a marriage from credit cards, student loans, child support and other obligations. The author suggests deciding upfront whether the debt will be paid by the person owing it or jointly by the couple. This can have an impact on how much is left from your incomes for household and other expenses.
Prenups are not carved in stone. Over the years, couples may decide to amend their prenup as their circumstances change. Some couples also add a postnuptial agreement.
Deciding on a prenup before tying the knot is no longer considered the cynical step it once was. It does not have to be about planning for failure, but about a couple putting their financial goals and expectations in writing. As couples increasingly marry at a later age than they used to and marry for the second or third time, they bring with them a more complicated financial history and obligations to others.
Merging two people's finances together can be complex. By codifying things with the help of legal and financial professionals, couples can minimize disputes later on, whether they stay together or not.
Source: Business Insider, "Here's Why Every Couple Should Get A Prenup Before Marriage" Libby Kane, Aug. 05, 2014