Why a Prenuptial Agreement May Be Good for Your Future Marriage
According to our modern sensibilities, the romance of marriage is supposed to feel like you’re being swept up in a whirlwind of good feelings and rosy impressions of the future. For many couples, this is true, but the fact remains that marriage is a legal arrangement with serious personal, legal, and financial consequences. In many ways, a marriage is a partnership like any other business. Couples who approach the partnership with a sense of duty and responsibility are, on average, more likely to experience joy and fulfillment throughout their remaining years.
Embracing the reality of marriage requires an honest look at all possible issues, followed by a frank discussion of expectations. Nowhere is this better represented than the back-and-forth negotiations that can occur during the formation of a prenuptial agreement. While it is true that prenuptial agreements can carry some stigma in our society, it is also true that a well-crafted prenuptial agreement can bring a sense of clarity to a marriage. Sensitive discussions are brought out into the open, and the couple has the opportunity to work past things that tend to get more complicated the more they are left undiscussed.
At New Mexico Financial & Family Law, we encourage our clients and individuals interested in marriage to at very least open up about topics that could pertain to a prenuptial agreement. While you, as a couple, may decide that a prenuptial agreement is not necessary, you should still go through the disclosures and discussions that arise during the formation of a “prenup.”
The following are some of the primary reasons a New Mexico family law attorney would recommend discussing and potentially signing a prenuptial agreement prior to the wedding date.
It Starts Frank Discussions About Finances
The true test of a marriage is, arguably, not whether you still feel attracted to one another decades from now but rather how well you work together when times are tough. Money, naturally, becomes more of an issue the less of it there is (although, in some cases, the opposite can be true). Accordingly, when couples have issues with money, it can strain the marriage to the breaking point.
Around a third of adults report that money is a leading source of conflict in their relationship. Research also shows that even when spouses don’t rate monetary issues as the top source of marital conflict, “marital conflicts about money were more pervasive, problematic, and recurrent, and remained unresolved, despite including more attempts at problem-solving.”
When arranging a prenup, the first step is full financial disclosure. Each partner reveals the totality of their current assets and debts, as well as the nature of their income. They should also make declarations for any definite plans they have for the future, such as buying a home, taking out students loans, etc.
These frank discussions lay the groundwork for an open and honest marriage. They also allow the couple to take their first look at their finances as a collective, giving them practice for the financial management of their household in the years ahead.
Having these conversations can be tough, but they will emerge later rather than sooner the longer the couple puts them off. Also, as financial advisor, Suzy Orman emphasizes: “If you cannot talk money to the person that you are about to marry, you are doomed for failure because money is going to run through your relationship more than anything else.”
It Sets Expectations for Your Future
Many people either get married when they are young or when they feel they are at a “crossroads” moment in their life. During these times, we often resolve to live in the moment and take each matter day by day. While this attitude is psychologically healthy in many respects, there is also a need to periodically take stock of some of the most important factors in your life. Namely: finances, spending, property ownership, businesses, and plans for the future.
We have no way to predict the future, of course, but we can talk about aspirations and expectations. During a prenuptial agreement formation, both sides of the couple are expected to come forward with all of their ideas about what they want for their own future and for the future of their marriage. This can include specific ideas about furthering your education, starting a business, owning a second home someday, and so forth. Putting these aspirations out in the open not only furthers the couple’s understanding of one another but also allows them to plan ahead.
The one aspect many couples get wrong about prenuptial agreements is that they only pertain to what happens should the couple get divorced. In reality, a prenup can be customized to include language pertaining to financial and legal arrangements during the marriage itself.
A prenuptial agreement can include provisions like:
- If a spouse decides to forego a career and raise the couple’s children, they will be provided for with a set income
- If a spouse decides to take out private loans to attend post-grad school, those loans won’t be considered community property in New Mexico
- A spouse must be an active participant in the other spouse’s business in order for the business’s equity to be considered joint property
All agreements set forth should be broad enough to make room for unpredictable future factors yet specific enough to satisfy contractual language “strength tests”. Know that any provisions set forth in the prenup must be considered equitable and fair to both parties, otherwise, they may be deemed unenforceable when challenged in court.
It Helps Keep Priority Assets and Debts Separate
There are a few situations where property can be sensitive: family-owned property, property acquired prior to the marriage, property related to business ventures, and pets. Similarly, a couple may wish to keep certain types of debt separate, such as credit card debt, private loans, student loans, medical debt, and so on.
In either case, a prenuptial agreement can keep assets acquired before the marriage — and often times during the marriage — separate. It all depends on the wording of the agreement, what each future spouse wishes to protect, and the compromises each is willing to make in order for the agreement to be equitable.
With these factors established, the couple can feel more at ease with the future knowing that sensitive discussions have been brought out into the open and arrangements have already been made to avoid the most likely sources of strife.
It Can Make Divorce Less Adversarial
Divorce can be amicable and result in a swift settlement — but it can also be nasty, lengthy, expensive, and result in significant mental hardship.
With a prenuptial agreement, many aspects of the divorce can be pre-finalized, whereas others will have guidelines helping to determine the best decisions to make given the couple’s wishes at the start of the marriage. The overall result is that the divorce will be quicker to resolve and less likely to lead to prolonged battles over certain assets or arrangements.
Both Future Spouses Should Have Their Own New Mexico Family Law Attorney When Arranging a Prenup
A prenuptial agreement can have measurable benefits for a couple, whether they are planning a wedding or decades into a happy marriage. However, for the prenuptial agreement to be viable, both sides have to be willing to compromise and be transparent. Any unreasonable provisions could be struck down if the prenuptial contract is challenged, and the entire agreement could be nullified in some instances if it wasn’t formed on a solid legal basis.
To promote the chances that a prenuptial agreement will be both executable and beneficial to all parties, each partner should be represented by their own attorney. That way, they can ensure they are on equal footing and have full disclosure for all factors that go into the agreement.
New Mexico Financial & Family Law can assist you with the drafting of a prenuptial (or postnuptial) agreement by answering your questions and counseling you as to the most prudent language to put within it. Since every couple is different, each spouse will want to put their own goals and intentions into words. These words will then form the basis of the legal language used to draft a prenuptial agreement everyone will be satisfied with.
For guidance and representation while you draft a prenuptial or postnuptial agreement, contact our firm for a no-risk consultation. Call (505) 503-1637 or contact us online to schedule your appointment today.