Prenuptial agreements (also known as Marriage Contracts) are no longer for the rich and the famous. Everyday people need contingency plans.
Prenups are most commonly used to determine how assets will be divided, and whether spousal support will be owed in the event of a divorce. Why plan for the breakdown of your relationship before even tying the knot? Why not? Planning for is not the same as anticipating. When you select a life insurance policy, you’re not expecting to have your life cut short in a tragic accident. When you purchase travel insurance, you are not anticipating cancelling your long-awaited vacation or to find yourself in a foreign hospital after a scooter accident. You purchase insurance to protect yourself and your loved ones. You hope for the best but plan for the worst, just in case.
Should you and your fiancé have that conversation? We debunk the pros and cons of prenups.
CON: It’s not romantic
If you or your partner intend to live by till death do us part, the prenup conversation can erode trust in your relationship. Asking your partner to sign a prenup may raise suspicions of motives or signal that you do not have faith in your relationship, or in your partner. This of course, is not the ideal start to a marriage.
CON: It may be unfair
No one can predict what the future holds. What might be fair and reasonable today, might not be the case years from now. Whether one party is blinded by love when they first sign, or circumstances drastically change down the road, a prenup may favour one spouse (whether intentionally or unintentionally). If you’re aiming for a fair outcome, leaving it up to the law may be in your best interests.
CON: It may be unnecessary
If you want what the law already provides (ie. an even 50/50 split), then you don’t need a contract to say the same.
If your agreement is poorly drafted, if either party has failed to disclose all assets and liabilities, or there is evidence of fraud, duress, unfairness or lack of representation at the time of signing, your prenup may be unenforceable. Any provisions in relation to child support, custody and access are also unenforceable by law. Therefore, if you’re going to go through the trouble (and potential arguments) to have a prenup drafted, ensure both parties have proper legal representation.
PRO: Honesty is the best policy
One of the most common causes of tension amongst couples is money matters. Full transparency in relation to your assets, debts, spending patters, expectations and goals for your financial future can help you and your partner get on the same page. This can be beneficial to your relationship and prevent issues (and potential deal breakers) creeping up on you in the future.
PRO: Protect family jewels
Whether it’s your great, great grandmother’s wedding ring, your father’s fine art collection, or a family cottage, you may wish to ensure valuable family assets and inheritances stay with your side of the family.
PRO: Limit your liability
Divorce means diving up the liabilities, along with the assets. If you save every penny while your less frugal partner lives life luxuriously, it may be wise to protect yourself. It would be unfair to be penalized for being risk adverse, or to have your hard-earned dollars going towards paying off your partner’s risky business ventures, extravagant purchases or gambling addictions.
PRO: Protect your empire
You put blood, sweat and tears into building your business from scratch. There’s no shame in wanting to protect that. For yourself or for your children.
Prenups allow you to define what is considered marital property. Perhaps you’re happy to share your income and your home, but when it comes to your business itself, that baby is all yours.
PRO: Avoid costs in the future
Divorces are expensive. It’s best to discuss how assets should be divided now that everything is peachy, and both parties are likely to be reasonable and amicable. It will save you both time, energy and money, should you decide to part ways.
If it makes you feel any better, statistics show that couples that enter into a prenuptial agreement are no more likely to get a divorce than those who do not.
Now we might be biased but in the wise words of Kanye West, “HOLLA, We want a prenup, we want a prenup! It’s somethin' that you need to have.”