Prenuptial agreements, also called prenups, offer peace of mind. They serve many purposes, such as giving spouses protection for assets they had before marriage and safeguarding inheritances for children from other relationships. There are many nuances to what a prenuptial agreement is, but prenups make sense for most people getting married in DuPage County, IL.
What Is a Prenuptial Agreement?
A prenup amounts to a businesslike contract that people sign before they get married. Despite being businesslike, it can be one of the best things to happen before a marriage. The associated open communication strengthens many relationships.
Each spouse-to-be must disclose a thorough list of assets, including bank accounts, real estate, business interests, investments, and vehicles. Detailed information on debts is also necessary. The spouses share their income and how they expect it to change over time. They disclose details on retirement accounts, estate planning documents, and other relevant information.
Prenups can clarify issues related to asset protection and division if a divorce occurs, as well as spousal support (alimony). They can also consider the impact of wills or trusts in case one or both of the spouses die. Each of those items can serve multiple purposes.
What Is the Intended Purpose of a Prenuptial Agreement?
It is helpful to know what the purpose of a prenuptial agreement is before you create one. Peace of mind is the overarching purpose of many prenuptial agreements. For example, there is no substitute for the following:
- Talking through all financial matters with your spouse and being secure in the fact there should not be unpleasant financial surprises down the road
- Communicating openly and honestly with your spouse and setting healthy patterns for proactive communication
- Knowing that your children from another marriage or relationship will be financially secure no matter what happens
- Feeling supported in your financial goals and being on the same page financially in the marriage
- Being confident that you will not lose a business or piece of property you had before the marriage
Another purpose of prenups in DuPage County, IL, is to streamline divorce with much less conflict if it occurs. Prenups also help to simplify matters considerably if one or both spouses die.
What Are the Benefits of Having a Prenuptial Agreement in Illinois?
The top benefit for many couples is the fact that they are taking the time to be honest with each other and disclose their assets, debts, financial expectations, and much more. Prenups can clarify financial issues and make for a more honest and stronger marriage.
For example, money issues play direct and indirect roles in the decision to divorce for many couples. Financial stress is a factor in 24% of divorces. A prenup can directly help with that, as well as a lack of compatibility. That is a factor in even more divorces, at 31%. When couples take the time to talk through financial matters and be honest with each other, it is a chance for them to double-check their compatibility and get on the same page.
Other common factors in divorce include too much conflict or arguing (31%) and parenting differences (20%). Prenups can stave off many issues in these two categories from the get-go. Being on the same page financially reduces arguments, and prenup discussions give spouses insight early on whether finances or money plays a role in how they parent.
In some cases, a spouse may be fearful that the other person is interested only for financial reasons. Having a prenup can ease these fears considerably. Similarly, a spouse may worry about marrying the other person due to the person’s large debt load. A prenup can ease concerns that the other person will end up responsible for the debt.
Two other benefits of prenups are preserving inheritance rights and avoiding drawn-out legal battles on issues such as asset division and spousal support if divorce occurs. Some divorces include a varied portfolio of assets such as vacation homes, investment properties, and investment accounts.
Asset Protection and Division
Asset protection and division are major reasons that prenups in DuPage County, IL, have the benefits they do. Many people, regardless of their age, can bring assets into marriage that they want to keep or preserve for others.
These assets that a prenup can protect include bank accounts, investments, houses, business interests, businesses, retirement accounts, and more. With a legally enforceable prenup, a spouse could use these assets in ways that benefit the marriage if he or she wants without having to worry about losing the assets due to commingling. Spouses can also benefit from knowing that their children (or other intended heirs) should get the assets they are meant to receive.
A prenup can outline the division of assets that are marital property. Generally, the division should be equitable. Fairness does not necessarily mean 50/50 division, though.
Protection of Individual Business Interests or Family Assets
A prenup can protect businesses or business interests. For example, if a spouse-to-be owns or participates in a sole proprietorship, partnership, limited liability company, corporation, franchise, startup, or professional practice such as a doctor or dentist office, a prenup can clarify what rights, if any, the other spouse would have and what happens in the event of a divorce or death.
A similar idea applies to family businesses. A prenup can ensure the security of a longstanding business and the continuity of operations if divorce, incapacitation, death, or other events occur. It can also preserve the business for future generations. Longtime family assets such as homes, artwork, and jewelry can be protected for future generations as well.
Steps to Create a Prenuptial Agreement in DuPage County, Illinois
It is possible to create a prenup yourself, but this approach carries downsides. It lowers the chances that the prenup will be valid and enforceable. Plus, people without the necessary expertise may overlook important aspects or make mistakes. It is typically better to have a family law attorney, also known as a divorce attorney, to help. You should have your own, while your spouse has his or her own.
Determine What to Include
Each situation is unique, but in general, include these things in a prenup for full financial disclosure.
- Assets: Each spouse should list assets they own individually and together. Examples include bank accounts and real estate.
- Liabilities: Disclose loans, credit card balances, and other debts.
- Asset division: Discuss how both of you will own your assets, including retirement accounts and businesses, and divide them (and your debts) if separation or divorce occurs. Clarify what is separate and marital property. If a business is involved, include provisions for how it will be valued to ensure fair asset division. (For example, the spouse who owns the business may want to keep it if divorce occurs, but the other spouse may want a fair division of any valuation increase he or she contributed to during the marriage.)
- Spousal support: Outline whether alimony will occur. If it will, explain the terms, duration, and conditions.
- Estate planning: Cover wills, trusts, and other common estate planning documents, and their influence on the prenup.
- Mediation: Including provisions for mediation or arbitration can prevent unnecessary court battles.
Also, include language indicating that both parties are entering into the prenup voluntarily and without coercion or duress.
Some prenups include a sunset clause. With this type of clause, the prenup is no longer valid after a certain length of time (or if other conditions occur). Sunset clauses can offer peace of mind to people who find prenups offensive or hurtful.
Prenups generally should not cover child custody or child support arrangements. These occur when necessary in a split or divorce based on the best interests of the child.
Hire a Family Law Attorney
There are questions to ask a divorce lawyer you are enlisting for prenup drafting. Ask about the lawyer’s experience in drafting prenups, especially with the involvement of considerations you may have such as family businesses, inheritances, or children from other relationships. Find out what the lawyer needs from you and how much time drafting the prenup should take.
Draft the Prenuptial Agreement
If you already have a document and want to know whether your prenuptial agreement is valid, a family lawyer can check that for you. The lawyer can also handle matters going forward. Otherwise, the lawyer can assist with your prenup from beginning to end.
To ensure validity, both you and your spouse should have separate lawyers. This is necessary to ensure fair advocacy for everyone and the protection of interests.
In some cases, one prenup draft is all that is needed. However, it is common for the spouses-to-be to go back and forth a few times to agree on the terms. Other types of marital agreements, such as postnuptial agreements, can add to the prenup later. They may be necessary if circumstances change quite a bit.