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Drafting a prenuptial agreement? Include these items for a successful document

Is drafting a prenuptial agreement something that could doom your soon-to-be marriage to failure? Unfortunately, a lot of our neighbors would answer "yes" to that question. I say that this is unfortunate because the idea that a prenuptial agreement (prenup for short) will harm your marriage is something of a misnomer. Rather, it is our experience at the Law Office of Bryan Fagan that prenups tend to have positive rather than negative effects on a marriage. What you may have considered being something only for wealthy or vain people is a document that your family could stand to benefit from. 

What is a prenup? Before we go any further in today’s blog post from the Law Office of Bryan Fagan, I thought it would be relevant to lay out what this document is so that we can define our terms and choose a path for our discussion. What a prenup ends up being is a document designed to spell out in specific terms how financial matters related to you and your spouse will play out in the event of a divorce. 

Will talking about a prenuptial agreement “jinx” your marriage and cause you to get a divorce? I can’t say for certain, but the likelihood of this is very low. First of all, I don't think you can jinx anything for that matter. Second, simply discussing how you want to structure the financial elements of divorce seems more responsible than anything else. Third, you and your spouse can always agree to no longer go by the prenuptial agreement and can start fresh if your circumstances were to change throughout your marriage. Discussing the terms of a prenuptial agreement may be enough to cause you and your spouse to be able to work past some otherwise tricky subject matter. 

Why wait to discuss something until you are married? Use the negotiation process for a prenuptial agreement to counsel yourselves on whatever it is that may be troubling you. Odds are good that the two of you will be able to come to an agreement and work past whatever it is that is giving you issues during this negotiation process. If you find that this is truly a sticking point, then you may have informed yourselves that the marriage wouldn’t last and you can stop the process in its tracks before a divorce is even necessary. If there are fundamental issues with your marriage, then figuring that out before you get married is far superior to finding it out after you have already tied the knot.

When you are discussing a prenuptial agreement what you are doing is forcing out into the open a conversation on your financial goals, concerns about money, debt, and general ideas about how a household should be run in terms of finances. Many people, even those that are engaged, do not fully appreciate how complex a subject this can be. It is not easy to get married and then jump in headfirst into managing a household’s finances with another person. If you and your fiancé are like many people you may even plan on keeping your finances separate from one another during your marriage. This is a particularly difficult arrangement given that it minimizes the opportunity to discuss finances once you are married. 

We don’t necessarily keep track of the “reasons” why people file for divorce, but of all the reasons why clients choose the Law Office of Bryan Fagan to represent them in a divorce I think that money fights and money problems stand right at the top of the list. No matter if we are in good or bad economic times, the fact is that if your family has no foundation when it comes to handling money issues you all will experience a lot of trepidation on this subject. It is not easy to discuss money with one another especially if you have no experience doing so. Think about how your family handled the subject of money and you will have a solid idea of how you and your spouse will do so during your marriage. 

How did you grow up when it came to money discussions?

Can you think back to when you were growing up? How was money discussed in your family-if at all? This is the main question that you need to consider in conjunction with this discussion on prenuptial agreements. For example, were you in a family where money was never discussed? If so, then you probably could stand to benefit from the conversations regarding money management, goals, dreams, and concerns. You may have never heard adults have a conversation about money. This means that you are ill-equipped to handle problems associated with money when they come up in marriage. This is since while you may be able to handle money issues OK when you were single, now that you are married it is a completely different ballgame. Doing things as a team means communication and coordination are paramount without those two skills you may as well not even discuss those topics. You can get some much-needed practice by discussing these subjects in prenuptial agreement negotiations. 

Next, you may have been in a family where the only discussions that you had in your family when it came to money were yelling/screaming matches between your parents. In many households, one spouse brought in the money and the other one figured out where the money is going to go. When money got tight, or a mistake was made with money this set up a perfect opportunity for one spouse to blame the other for the mistake. This is a rough set of circumstances and one that could be avoided by both spouses taking on the responsibility of making sure that they had some knowledge of the household bills, income, and other issues related to family financial health. Don't repeat the problems of your parents. A prenuptial agreement can ensure that you all discuss topics related to personal finances constructively. 

Or, you may have been in a family where the financial discussions that you had were completely based on fear and concern of never having enough money. Your family may have been relatively well off but if one parent or the other didn't feel like you all had “enough” then you can never feel like you have any degree of financial peace about the family. Rather, you all can be made to feel like your only path to financial well-being is through ratcheting up the concern level to 100 and making every $5 cup of coffee a decision that could make or break your family. Putting everything in your financial house into order and perspective is a great service that you and your fiancé can provide yourselves with. 

Overall, it pays to be able to understand just what kind of upbringing you had when it came to money. History may not repeat itself, but it sure does rhyme. The last thing you want to do is make similar mistakes as your parents did. You can do and achieve more than your family. Just because your family did something a certain way does not mean that you must do it that way, as well. Here is what I mean by that in the context of your family and your new family with your spouse. 

Look at your family and how you all handled matters related to money. You are more likely to mimic those behaviors than to become a completely different person. Best business practices mean that you take the best practices of one company and then you implement those as best as possible. You can take in the best practices and then pitch out those habits which make less sense or do not garner the results that you wanted. Businesses do this all the time. Your marriage is more important than the success of a business, but the overall trend holds. Take in the qualities that you most admire about your parents and then develop new skills based on your experiences learned with your spouse.

Costs of a prenuptial agreement?

The costs of a prenuptial agreement can vary dramatically. To be sure, you should begin your search for an answer to this question by conducting interviews with attorneys. Remember that the attorney is there to help you. You are hiring him or her- not the other way around. You can meet with multiple attorneys and work with them in consultations to learn more about their areas of expertise as well as how much money they charge for helping you draft a prenuptial agreement, 

The more complicated your estate and the more detailed your prenup becomes, the more expensive drafting a prenuptial agreement can be. Costs can range from just below $1000 to many thousands of dollars. Since only you know the exact circumstances of your family, only you can guess or estimate what the costs of a prenup will be. For that reason, it is best to think long and hard about the issues that you and your fiancé will be going through, 

Is there a difference between a prenuptial agreement and a postnuptial agreement?

Some people assume that these two terms can be used in the same format. However, as we are about to tell, there are some significant differences between a prenuptial agreement and a postnuptial agreement. Let's examine some of those differences now and then you can decide what kind of document or agreement you need to pursue. 

Postnuptial agreements are like prenuptial agreements but would have to be agreed to and signed during your marriage. Their enforceability is the same as a prenuptial agreement- the only difference is when the document is agreed to. Sometimes people have different reasons for signing either document depending upon several factors. It may just be that you and your spouse need to negotiate a postnuptial agreement due to your running out of time to sign the prenuptial. It is not the most romantic thing in the world to sign a prenuptial agreement the day before a wedding. It also calls into question the legitimacy of the document given that it can appear that one side or the other was forced or coerced into signing the document. 

There may be issues that are in the process of happening at the time of your wedding that needs to be addressed after the wedding. For example, sometimes you may have had a relative pass away immediately before your wedding. You may know that you are inheriting a large sum of money from a deceased relative but are not sure exactly how much or in what form you are going to get the money. Stocks? Investments? Real estate? Cash? You may need to wait until the dust settles on this to decide on the final wording for the financial agreement with your spouse. The timing did not work out to be a prenuptial agreement, but it will work out to be a postnuptial agreement. 

Or you may be selling a business and are not yet sure what all the contingencies and details will look like. If you have loans or a line of credit under the business, then it may be your fiancé who wants to know what that sale will look like before she agrees to sign on the dotted line. Do not assume that this is a bad thing. Your spouse is a reasonable person who may want to agree without all of the information available to her. Who can blame her? 

Under what circumstances should you especially consider signing a prenup?

There is a wide range of circumstances at play that may demonstrate that you need to consider negotiating and eventually signing a prenuptial agreement. If you or your spouse have already been married, then this would be a straightforward reason why a prenuptial agreement may be for the best of all parties involved. People who have already gone through a divorce probably would not be excited at the prospect of doing so again. As a result, if you can avoid the financial fighting that comes with a divorce why wouldn't you? That is exactly what a prenuptial agreement is designed to do. Emphasize your children (if any) and off the financial back and forth that can suck so much energy out of you. 

If you have been through a divorce, then you may believe that your spouse has taken advantage of you during the divorce process. In that case, remember that you should not seek to put yourself in a bad position once again. A prenuptial agreement can allow you to protect yourself from any future bad actions on the part of your spouse. Do not underestimate the ability for bad luck or misfortunate to strike you twice in the context of a divorce. It is better to just go through with the prenuptial process and put yourself in a position to survive the divorce and set yourself up for success in a post-divorce world. 

Next, do you or your fiancé have children? If you do, then you may want to consider a prenuptial agreement. The financial interests of children from a prior marriage may need to be protected in some way. Keeping separate property separate, creating a living trust, or drafting a will may all be steps that you need to take to protect your minor children from a prior marriage. 

Another consideration that you may want to look at is your income compared to that of your fiancé. If you earn much more money than he or she does, then you should consider the ability of a prenuptial agreement to shelter you from an extremely aggressive request on the part of your spouse for spousal maintenance. Property division may be another topic that your marital property agreement needs to be looked at. Even if you do not have a tremendous amount of wealth at this moment it can be good to sign a prenuptial agreement given that you may be wealthy before your marriage is done. 

Finally, small business owners can benefit a great deal by having a prenuptial agreement You can gain the power to make all the decisions about managing your small business as well getting the information sent out about how you want your business debts to be handled during your marriage and into a possible divorce, If you anticipate that your business will increase in value between now and a potential divorce then you should consider a prenuptial agreement. Keeping total control of your business despite a divorce can be best achieved by having a prenuptial agreement in place. 

Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan

If you have any questions about the material contained in today's blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law as well as provide you with an idea of how your family's circumstances may be impacted by the filing of a divorce or child custody case. 

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