The decision to use a prenuptial agreement can be a difficult and confusing one. It often can feel contrary to the decision that necessitates the prenuptial agreement in the first place — the decision to get married and to love and trust another person. While the decision whether to use a prenuptial agreement must be a personal one, understanding the benefits that a prenuptial agreement can have for you might help make the decision a little easier and less confusing.
Generally, the primary purpose of a prenuptial agreement is to take some of the guesswork (or legal arguments) out of what would happen with your finances if you were to get divorced. For example, if you owned your home prior to getting married, you might want to ensure that you will still own that home after a divorce. There are many things that can happen during a marriage that might cause your spouse to gain an interest in that home even though you were the sole owner prior to your marriage. This same concept applies to businesses, retirement accounts, and other assets or investments. A prenuptial agreement is a great way to bring more certainty and security to your financial picture in case of a divorce.
Another important use for prenuptial agreements is to prevent California family law from applying to your divorce. The California Family Code has a number of clear principles (and many not so clear principles) that the courts must apply in every divorce case. For example, community property must be divided equally between spouses upon divorce. You may not want this principle applied to your divorce if you worked hard and made a nice living while your spouse decided to quit their job and stay home all day. California law says, with some exceptions, that everything that you earned during your marriage (and whatever you purchased with it) is community property and therefore must be divided equally. A prenuptial agreement can ensure that this principle does not apply to your divorce. Using a prenuptial agreement will allow you to decide for yourself how your earnings during the marriage are divided in case of divorce.
A prenuptial agreement can be a powerful tool in reducing your costs and preserving your assets in the event of a divorce. However, it is important to remember that there are specific rules regarding the negotiation and signing of prenuptial agreements that are intended to ensure that both you and your finance` understand what you are agreeing to. Additionally, it is important to keep in mind that you are, in a sense, attempting to predict the future. It is not an unusual occurrence for a prenuptial agreement that was thought to benefit one spouse at the time it was created, ends up benefiting the other spouse at the time of divorce. For these reasons, it is important to thoroughly discuss with an attorney the purpose of your prenuptial agreement and the specific language used to achieve that purpose.
In the end, the inescapable truth is that marriage is a journey with too many twists and turns to predict how it might turn out. A prenuptial agreement cannot tell you exactly how its going to end, but it can do a lot to limit the possible outcomes and give you some peace of mind as you start out on the journey.
Leading the industry through his innovative approach, Dino Katsiametis has over 17 years of extensive experience within mortgage, banking and real estate industries. His passion for the collective financial and investment services sector combined with his distinct insight, has catapulted Money Matters with Dino onto the forefront of financial news.
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