The Benefits of a Prenuptial Agreement

While most people enter holy matrimony with the best intentions, the reality is that a large percentage of marriages fail. In the United States, it is estimated that between 35 to 50 percent of first-time marriages end in divorce; this number increases significantly with each successive marriage.

With these figures in mind, prenuptial agreements can be a wise decision for many soon-to-be married couples.

What exactly is a prenuptial agreement?

A prenuptial agreement, commonly known as a prenup, is a written contract created by two people before marriage. In most cases, a prenup details the property, assets, and debt each owned by each marriage partner and dictates how these assets will be divided in the event of a divorce.

At its core, a prenuptial agreement is designed to protect both spouses, superseding state laws that would normally dictate how a couple's assets are divided in a divorce.

Prenups aren't just for the ultra-wealthy

Prenups aren't just for the wealthy. While they might carry the stigma of being reserved for billionaires or celebrities, the truth is that prenuptial agreements can benefit anyone who wants to safeguard their financial future, especially in the event of a divorce. Think of it as a safety net—a way to protect what you’ve worked hard for while also creating clarity and security for both partners in the relationship.

Consider this: you’ve worked tirelessly to build a business, a prenup can ensure that the fruits of your labor remain yours. Without one, in the event of a divorce, your business might be subject to division, even though you started it before marriage. In North Carolina, assets acquired during marriage are generally considered marital property and are divided accordingly. A prenup allows you to designate what’s separate property from what’s marital property, helping avoid costly disputes down the road.

Now, you might be wondering, “What if I don’t have a business or substantial assets right now? Do I still need one?” The answer is yes, you might still want one. A prenuptial agreement can address more than just property division—it can also outline financial responsibilities during marriage, such as who will handle debts or contribute to household expenses. It can also clarify what happens in the event of death or a long-term illness.

Prenup limitations

However, it's important to understand the limitations of a prenup. For example, prenuptial agreements cannot cover issues like child custody or child support. These matters are determined by the court based on the best interests of the children at the time of the divorce, not the agreements made before marriage. Courts will not allow provisions in a prenup that attempt to dictate custody or support arrangements.

Expecting the best and preparing for the worst

Outside of the legal benefits, there is an emotional benefit of discussing a prenup before tying the knot. While discussing a prenup is unlikely to make your soon-to-be spouse swoon, discussing money, assets, and future expectations can lay a solid foundation for trust and transparency in your marriage. It shows that you are both committed to protecting one another's interests, even if things don’t end up working out. And, perhaps most importantly, it helps set clear expectations—something every healthy marriage benefits from.

In short, a prenuptial agreement isn’t about expecting the worst—it’s about preparing for it. It is about giving both partners a sense of security, ensuring that if life takes an unexpected turn, you can part ways with respect, rather than fighting over who gets what. It is a financial plan for your future, and one that is worth considering, no matter where you are in life or how many assets you have.