Many couples who are engaged to be married often wonder whether they should obtain a Prenuptial Agreement (“Prenup”) prior to their wedding day. We often receive questions from clients surrounding Prenups, how they work, and whether obtaining one is in their best interest. The best way to determine whether you need a Prenup is to ensure you understand what a Prenup is and what it can do for you in your particular circumstances.
What is a Prenuptial Agreement?
A Prenup is a binding written contract that is negotiated and signed by you and your fiancé prior to marriage. It is tailored specifically to your needs and agreements to pre-determine the outcome of multiple issues that typically come up during a divorce, should you need to go down that road someday. It may determine how you will handle the division of assets and debts, spousal maintenance, and other matters.
A good analogy is to think of Prenups similarly to automobile insurance – none of us intend to get into a car accident, just like none of us intend to get divorced when we marry our loved one — but having insurance, or a Prenup, in the event that the unexpected or unintended happens will save you time, stress, an
d money in the long run.
Best practice is to have each party retain and consult with their own respective, independent legal counsel during the process to ensure fairness and transparency. Typically, one attorney will draft the agreement, while the other party’s attorney will help them review the agreement and explain the terms that they are agreeing to. More often than not, the parties and their attorneys will negotiate over the terms until a final agreement is reached.
Once the agreement is finalized, each party will sign it in the presence of a notary and each party will receive an original for their files. Sometimes, an abstract or notice is recorded to put the parties’ creditors and other third parties on legal notice that a Prenup exists.
How to Determine Whether You Need a Prenuptial Agreement
There are many factors to consider when choosing whether or not to have a Prenup created for yourself and your fiancé. These factors may include your age, career success, financial stability, property owned, interest in or ownership of a business, financial assets, etc. These are all complicated factors that you will need to discuss with an attorney, but we’ve compiled some information that may help you to consider whether a Prenup is right for you.
Who needs a Prenup?
Individuals who are older, well-established, and financially successful are typical prime candidates for Prenuptial Agreements, as they often have accumulated significant assets prior to the marriage they’d like to protect in the event of a divorce. However, age and financial success are not always the determining factors that lead to someone seeking a Prenup. Individuals of any age and of any income level may want to consider a Prenup before marriage, particularly if they own or have an interest in substantial assets or property going into the marriage.
Personal or Family Property
If you are a beneficiary of a family trust or business or anticipate receipt of a substantial inheritance, you may want to protect that with a Prenup. Or you may have extensive collections, such as stamps or precious metals, or simply priceless family heirlooms that you want to ensure are protected from claims of the other spouse in the event of divorce, a Prenup can ensure that these items remain your property.
Financial Assets or Businesses
Prenups can also cover any financial assets that you own prior to marriage. These assets include, real property, financial accounts such as banking, security, brokerage, savings, or retirement accounts, or vehicles.
If you own a business, or have financial interest in a business, you will want to strongly consider obtaining a Prenup before you are married. According to Arizona law, your efforts and any increase or appreciation in value (or profits) resulting from those efforts in your business are considered community property, which your spouse could have a claim for. A Prenup can exempt your business, any efforts expended in that business, and any appreciation in value or profitability in that business from Arizona community property law and therefore protect it in a divorce.
Protecting your assets during marriage will provide peace of mind and prevent potential heartache in your future if, unfortunately, you find yourself divorcing. To find out whether you’d benefit from a Prenup, contact the attorneys at OWENS & PERKINS by calling our office at 480.994.8824 or click here to schedule your FREE 30-minute legal consultation.
