Aren’t weddings romantic? Two people pledging their love to each other for the rest of their lives? But what if I told you that planning for the end of a marriage could make your marriage stronger?

#MONEYMONDAYSJA: Prenuptial Agreements

By: Danielle Brown

What’s more romantic than weddings? Two people pledging their love to each other for the rest of their lives? When thinking about getting married, it’s easy to get caught up in the dress, the flowers or the cake. Busy fantasizing about the long and happy life you and your partner will share together, the last thing you want to do is consider the possible end of that future. And that’s the first thing people think of when they hear the word “prenup”. 

A prenuptial agreement or prenup is a type of contract created by two people before entering into marriage. And though it sets out property rights and responsibilities throughout the duration of a marriage, it’s commonly invoked at the end of one. Hence, in popular culture, having a prenup is seen as “planning for divorce”. However, instead of planning for divorce, what if we looked at prenups as a method to protect your finances, both individually and as a couple. Thus, building a stronger marriage

As the saying goes, love makes people do crazy things. It clouds their better judgment. And when entering into a serious relationship, getting engaged then getting married, many couples tend to gloss over important but uncomfortable conversations, such as finances. You trust your partner and figure “hey, if we’re compatible romantically then we must also be compatible financially, right?”

Prenups have a bad reputation in our society, but they may be the key to helping couples have that uncomfortable conversation. Drafting a prenup allows you and your partner to outline your financial expectations for your marriage. You and your partner may have financial goals that you hope to accomplish now that you have two incomes, such as owning a house or saving for retirement. As a contract, you can also detail each partner’s financial responsibilities, such as who is responsible for paying the bills or the mortgage and how every penny is spent, saved and invested.  

A prenup would also help you to gauge each other’s different financial management styles and spending habits. You may not be aware of how your partner spends money until after you’ve joined your finances to theirs. And joining your finances may be a significant influx of cash. But to quote Biggie, “mo money mo problems”. You and your partner need to sit and discuss how that excess money will be used. Better to find out your partner is a shopaholic before the wedding and their next shopping spree.

Rich & Famous

If you recall the infamous divorces of Jeff and Mackenzie Bezos, Bill and Melinda Gates or Kanye West and Kim Kardashian, then you’ll remember that prenups, or the lack thereof, were a prominent issue in the media. Mackenzie Scott walked away with $38 billion dollars in Amazon shares after her split from Jeff Bezos, reportedly the largest divorce settlement in history. They didn’t have a prenup and  got married before Amazon was this mega global behemoth. The lesson here is get a prenup before you get rich.

Prenups are drafted to consider each couple’s financial situation. For less wealthy couples, this can mean protecting their earning potential. Maybe at the time of your marriage you didn’t have much, but you don’t intend to be broke forever, especially if you’ve signed up for my Masterclass. But your earning potential may come to fruition several years into your marriage.

For couples with a significant salary difference, both partners can benefit, not just the wealthier one. Whether you realize it or not, even if you’re not absurdly wealthy you do have financial interests to protect. Do you or your partner: 

1. Have significant debts such as credit cards? 
2. Own a business or have a stake in someone else’s business? Or 
3. Plans to quit your job to raise your children and be financially dependent on your partner? 

Those are a few examples of financial interests that can be addressed in a prenup. And a prenup between less wealthy partners may be more beneficial because there’s less money to divide. With a net worth of $170 billion, Jeff Bezos isn’t starving after paying out $38 billion to Mackenzie. But for less wealthy couples, dividing less money would be a larger financial burden. Plus, it’s protection from paying off someone else’s debts or financial insecurity from leaving your career. 

Divorce

Divorce: the issue nobody ever wants to consider, especially during the honeymoon phase of their marriage. In all honesty, divorce is a possibility for every marriage. And divorce proceedings can take years, especially if both parties are constantly going to court to divide every asset. Having a prenup can shave years off of those proceedings. Depending on how long you’ve been married, it may be difficult to keep track of who owned what before and during the marriage, and what assets were individual property versus marital property – meaning both of you owned it jointly. But your prenup makes the divorce smoother since it’s a contract where both parties already agreed on some of those issues already. Without a prenup, it will be up to your court’s jurisdiction to decide who owns what when dividing assets. And while that could end in your favour, it would be a safer bet to have a prenup stating those facts. 

Considering a prenup isn’t a road map towards your divorce, nor is it an indicator that you don’t love or trust your partner. Instead, it’s falling in love with your brain turned on. Prenups may not sound romantic, but financial stability is the new sexy.

Categories: MoneyMondaysJA