Why Is a Prenuptial Agreement a Good Idea?

Why Is a Prenuptial Agreement a Good Idea?

Prenuptial agreement, also referred to as a premarital agreement or a prenup, is a contract that specifies what will happen to a couple’s assets if they divorce. Although prenuptial agreements may seem unromantic, they can have many benefits.

 

AUSTRALIAN PRENUPTIAL AGREEMENTS

Pre nuptial agreements, known as “binding financial agreements,” became enforceable in Australia in 2000 with the enactment of the Family Law Amendment Act 2000.

 

Strengthening Current Relationships

Discussing issues like money and property can clarify a couple’s understanding of their assets, which can improve the relationship and decrease the probability of divorce.

 

Clarifying the Future

A prenuptial agreement allows both people in the marriage to have a clear understanding of what life after divorce would be like.

 

Facilitating Divorce

If a couple decides to divorce, a prenuptial agreement can facilitate the process, making it faster, more efficient and less contentious

 

Practical Approach

A prenuptial agreement is a practical approach to protect assets acquired in the past and after the marriage. In the event things do not work out, a well-drafted prenup can help avoid a contentious split and costly litigation.

A prenuptial agreement be a good idea if following questions are discussed

• Do you have significant assets that you are concerned about keeping if your marriage does not survive?

• Do you or your new partner have tax, alimony or child support obligations?

• Is this your first marriage or are you remarrying?

• Do you want to protect the assets of children from a prior marriage?

• Do you have a financially dependent parent or parents?

• Do you own a business?

• Do you have a professional practice or partnership?

• Is there any property in another state that could become the object of a dispute of ownership?

• Are there outstanding debts that you need to address before marriage?

 

What types of arrangements can a prenup address?

• It can protect your assets accumulated prior to your new marriage so that, for example, children from your previous marriage may inherit those assets.

• You can also use a prenuptial to have your new spouse waive rights as a beneficiary of your retirement plan, if you want i.e. your spouse and/or children from a previous marriage to be the beneficiaries instead. 

• Your prenup can indicate that funds from a certain source (such as a business, stock portfolio, etc.) belong to one or both spouses, and in what proportions.

• It also can indicate which debts are the responsibilities of one or both spouses, and in what proportions. 

• It can determine which of the spouses will manage business, investment, and banking details. And of course, one spouse can make arrangements to distribute any type of assets to the other spouse. 

 

Good idea in case of a large difference of age or financial status

It is also a good idea if the newly married couples have a…

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