Basic Prenup

Prenups can make the unthinkable easier to handle.

Marriage is an exciting time for a couple. But couples need to plan and think about a few things before tying the knot: a wedding date, where to go for a honeymoon, where to live, premarital counseling and so on. It is also common for couples to plan what to do should the unthinkable happen: death or divorce. This plan is called a prenuptial agreement or a "prenup."

Prenup Overview

A prenup is an agreement an engaged couple drafts that states how to take care of financial matters in the event of a death or divorce. The Equality in Marriage Institute points out three rules to follow when creating a prenup: exercise full disclosure, use separate lawyers to help plan the agreement and give yourself a lot of time before the wedding to draft a prenup.

When to Consider a Prenup

A prenuptial agreement is beneficial to any couple planning to get married. But there are times when an individual should seriously consider drafting an agreement. An individual with assets, children from a previous marriage or those who are college students should consider a premarital agreement. Bankrate.com also advises people to have a prenup if one of the couple owns a business, expects to receive a large inheritance, has substantially more funds, has a higher income than the other partner (or an increase in income is in the future) or has a relative that needs to be taken care of full-time.

What to Include

In a prenup, discuss how debts incurred before the marriage will be paid and list each individual's means of income, assets and expected inheritances. Couples should also figure out what to do with property of value, such as gifts or real estate in the event of a divorce. The Equality in Marriage Institute advises couples settle the details of alimony, spousal support and child support, and discuss what will happen with insurance policies if the couple splits up. In addition, outline the details of wills already made and explain what should happen to the gains, dividends and proceeds of any property owned.

Benefits of a Prenup

Although prenups are hard to think about and discuss with a partner, it is easier to plan one before tying the knot than it is to go through a messy divorce. Bankrate.com says a prenup gives more power to a couple than a divorce would should the state (or a divorce court) have to divide their assets for them. When a prenup is made, you can make sure assets are divided fairly and do not end up in undeserving hands.

Keep It up to Date

Like wills, it is advised that prenups be kept up to date and reviewed every few years. The purpose of doing this is to make appropriate changes, especially if a couple's financial situation changes. Some couples even choose to add a "sunset clause," according Bankrate.com. This clause would put an expiration date on the prenup.

References

• The Equality in Marriage Institute: Creating A Prenuptial Agreement
• Bankrate.com: Everything you need to know about prenuptial agreements