Getting married can feel like a daunting prospect – even if we know for a fact that we have met “the one.” No one has a crystal ball that tells the future, and we can never be totally sure about what the future might bring.
We also need to consider the fact that marriage has become essentially a financial arrangement in the eyes of the law, regardless of any spiritual or emotional connections we might have to our spouses.
With all of this in mind, it makes sense to consider strategies to maintain financial security as you approach marriage. One such strategy is to obtain a prenup.
But what exactly is a prenup? How can we get one? What exactly are the benefits of this agreement, and why should we even consider this strategy? Let's answer all of these questions and many others.
In this article, we will find out why a prenup is one of the best ways to prepare for the unforeseen circumstances that are so common in modern marriage.
What Exactly IS a Prenup, Anyway?
The word “prenup” is short for “prenuptial agreement.” The word “prenuptial” is a combination of “pre” and “nuptial.” The latter derives from the Latin verb “nubere” which means “to marry.” In other words, a “prenuptial agreement” is an agreement that occurs before we get married.
But what kind of agreement would we actually need before marriage? To answer that question, we only need to imagine all of the potential disputes that might occur over the next few years.
Spouses may argue over money, sex, parenting, and much more. Obviously, the best option is to resolve these disputes without divorcing or going to court. But this is not always possible – especially when the disputes involve financial irresponsibility, cheating, child abuse, and other serious cases of misconduct. In some cases, divorce is the only real option.
When divorce occurs, a prenuptial agreement comes into play. We can turn to this predetermined agreement to resolve a number of disputes that might arise during divorce. These disputes might involve property division, alimony, and some matters related to the children.
The prenuptial agreement cannot cover all child-related issues because the family court needs to make sure the child's best interests are being protected.
What Can a Prenup Help Me Accomplish?
The most obvious application of a prenup is to protect our finances. It is no secret that many spouses fear losing roughly half of their assets in the event of a divorce – and it is an understandable concern. Consider the relatively high number of marriages that end in divorce, and it is clear that prenups may be very useful for certain spouses.
But how exactly does a prenup help us protect our wealth? Let's say that an entrepreneur marries their spouse right before their company becomes big. This entrepreneur might know for a fact that they have an idea that can earn hundreds of millions of dollars.
But after they get married, all assets that they accumulate during the marriage become “marital property” under Colorado law. This means that they must hand over roughly half of all the company's profits if they ever get a divorce.
In this situation, a prenup would protect them from this outcome and create a more favorable division of assets. Note that if the spouse had a business that was already earning hundreds of millions, a prenup might still be worth it. The business itself would be considered a “separate asset” and, therefore, ineligible for equitable distribution.
However, the company's earnings for each year of the marriage may be considered marital assets and all of this income could be divided during a divorce.
A prenup can also help spouses avoid additional financial consequences, such as alimony. If both spouses agree that alimony is not necessary, they can put this in writing and avoid having to deal with it in the event of a divorce.
Some prenups can be highly imaginative, and it is possible to create prenups that cover a wide range of different situations. For example, spouses can put “no-cheating” clauses in their prenups that cause financial penalties if either is unfaithful.
What Can't a Prenup Achieve?
While there are many possibilities when we create prenups, these agreements cannot do everything. For example, they cannot detail personal preferences that someone might have, such as who does which chores, what food we eat, and where we go on vacation during the marriage. At the end of the day, prenups are primarily financial tools. This is why prenuptial agreements are not effective in dealing with issues related to children.
When Might My Prenup Become Invalid?
Prenups can become invalid under a number of different circumstances:
- The Prenup Was Unconscionable: If the prenup is “unconscionable,” it means that the agreement just is not fair. While prenups can be extremely lopsided, there is a limit. For example, the prenup cannot subject a spouse to extreme financial hardship (such as leaving them homeless).
- The Prenup Was Signed Under Duress: We cannot threaten or coerce our spouses into signing prenups. For example, it is not altogether legal to tell our spouses that we will leave them if they do not sign on the dotted line. They need to make this decision without being pressured in any way.
- The Spouses Did Not Disclose Assets: A prenup may also be invalidated if either spouse fails to disclose their assets. For example, a spouse might have millions of dollars in Bitcoin that they never revealed.
- The Prenup Was Not Properly Created: A prenup may also be invalid if it was not properly created. A verbal agreement is never legally enforceable, and we would probably run into issues if we wrote our prenup on a napkin at a restaurant. This is why it's so important to work with a qualified attorney.
Where Can I Find a Prenup Attorney in Colorado?
Considering whether or not to get a prenuptial agreement? You are not alone. The best thing we can do in this situation is to book a consultation with an experienced family law attorney in Colorado. Choose an attorney who has specific experience with prenups, such as the Law Office of Casey James Alexander.
During your first consultation, we can go over the pros and cons of prenuptial agreements in much more detail. This initial, no-obligation meeting also gives us the chance to ask important questions that we might have about our specific situations. From there, we can decide together whether a prenup is truly the right option. Reach out today to get started with an effective action plan.