Planning a wedding involves countless decisions, from choosing the perfect venue to selecting flowers. But beyond the celebration details, many couples are also considering an important legal and financial step: creating a premarital agreement. This guide addresses some frequently asked questions about premarital agreements to help couples understand the process and make informed decisions for their future together.
What is a premarital agreement?
A premarital agreement is financial planning before marriage, and the process should be thoughtful and collaborative. As unromantic as it may sound, a premarital agreement is simply a contract between a couple made in anticipation of their marriage. This agreement can address financial obligations during the couple’s marriage and when their marriage ultimately ends, either by divorce or death.
What is the purpose of a premarital agreement?
Like many agreements, the purpose of a premarital agreement is to clearly state the parties’ intentions, expectations, and agreed obligations, and to change the “default” outcomes provided by law in the absence of an agreement. These agreements allow couples to customize their financial arrangements rather than relying solely on state laws.
What financial matters can a premarital agreement address?
A premarital agreement can address various financial matters, and a couple decides which of them to include:
- The treatment of property as the separate property of each party (including property owned prior to the marriage, gifts, and inheritances) or the marital property of the couple
- A marital account for expenses during the marriage
- The filing of income tax returns during the marriage jointly or separately
- The division of property and support payments, if any, in the event of divorce
- The intended disposition of property upon death during the marriage
What should couples discuss before creating a premarital agreement?
Communication is crucial, and there is no substitute for direct communication between partners about their financial expectations. Important topics to discuss include:
- Will finances be kept separate, or some combined and some kept separate?
- What standard of living (home, vacation home, travel) does the couple expect to maintain?
- Will both parties contribute to family expenses?
- Are there any family trusts or expected inheritances?
What is the timeline for preparing a premarital agreement?
Couples should start early in their engagement. The average U.S. engagement is 15 months long, which leaves plenty of time to complete premarital agreement planning before the wedding day. Starting the process early helps avoid unnecessary stress and haste, as some of the decisions that need to be made take time to think about and require more than one conversation between a couple and with their counsel.
Should we work with a financial coach during this process?
Working with a financial coach can be very helpful. Money matters can be complicated for entirely non-financial reasons. How people feel about money, wealth, and financial decision-making impacts their premarital agreement planning experience. While attorneys know the law and may be able to help with the emotions, a professional coach can often be a tremendous resource.
How can couples choose the right legal counsel?
Choosing the right attorney for both parties matters. The attorneys set the tone for the negotiations. Know the approach your attorney takes. Some may be adversarial. Others more collaborative. Each party should hire an attorney who helps them feel comfortable and confident.
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