Discussing Financial and Personal Goals Before Saying ‘I Do’
After a couple gets engaged, they spend a lot of time planning for the big day and thinking about what the future will hold for them as husband and wife. Although this seems like the most important thing a couple should be doing during this time, it is also important for them to have a discussion about how their economic and emotional lives will merge together. Additionally, they should take the time to do a thorough assessment of their personal and financial goals before they say “I do.”
Protecting Wealth with a Prenuptial Agreement
Depending on the couple’s unique circumstances, this assessment may or may not include putting together a prenuptial agreement, which can help preserve the couple’s relationship while also protecting each individual financially. For those couples who are considering this type of agreement, it is important to enlist the help of a family lawyer to ensure there are not grey areas or loopholes that would make the prenuptial agreement unclear or unenforceable should the couple divorce.
In situations where the couple has a business or a degree of wealth involved in their relationship, a lawyer can help them protect the assets they owned prior to the marriage without using a prenuptial agreement. These types of agreements are more often used when one or both members of the couple are business professionals or if the couple anticipates having children and one parent is to remain at home to care for those children while the other parent earns an income to support the family.
Misconception of a Prenuptial Agreement
It is a standing misconception that a prenuptial agreement is meant to help protect wealth – the reality is these agreements are much more effective in protecting the potential for lost-earnings as well as any retirement benefits or savings. One of the unrecognized but important goals of a prenuptial agreement is to recognize the contribution made by a stay-at-home parent. A recent study found that parents who stay home to raise children, even if for one year, lose almost 40 percent of their earning power.
The impact of this can be neutralized by using a prenuptial agreement to ensure that a parent who stays home with the children is still financially supported by his or her spouse even if the marriage ends. Laws regarding spousal support vary from one state to the next, so without a well-structured prenuptial agreement, the judge decides whether or not a stay-at-home parent needs to be financially supported, and if the answer is no, it could force that parent back into the workforce while earning less.