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You are here: Home / Blog / How a Pre-Marital Agreement Protects Finances  

How a Pre-Marital Agreement Protects Finances  

February 1, 2022 By Ron Anfuso

Not every couple needs a prenup or pre-marital agreement. For example, two people getting married out of college who have not accumulated any real assets and never been married before, do not need a prenuptial agreement. On the other hand, couples getting married for the second or third time and who have children from previous relationships and assets that are owned as their separate property prior to the marriage, should seriously consider entering into a prenuptial agreement.

Reasons to have a Prenup to Protect Your Financial Affairs

There are several reasons a couple may find it in their best interest to have a prenup. For example:

Premarital Agreements and Finances
  • To protect real estate. If one person owns real estate prior to the marriage but plans on using community funds to make mortgage payments, a prenup can designate that these payments do not create a community property equitable interest in the real estate. Otherwise, if there is a divorce, there will be a Moore/Marsden calculation to determine the community and separate property interests in the property.
  • To protect bank accounts. What is generally done is that the prenup states that each person will keep their own separate bank accounts as separate property. Then, the parties can establish a new joint bank account from which they will deposit community funds and pay community bills.
  • Retirement accounts. If a retirement account is owned by one (or both) of the parties prior to the marriage, the couple can articulate in the prenup how that will be handled if community funds have been deposited into the retirement account during the marriage. 
  • Spousal support. This is often based on the number of years the couple is married. For example, if they are married for five years, the spouse who needs support will receive a certain amount of money for a predetermined duration. As the length of the marriage increases, so does the amount of spousal support.
  • Child support. A prenup may not waive the receipt of child support that is paid as this would be against public policy. 
Advantages of Having a Prenup

If one or both parties are wealthy at the time of the marriage, a prenup makes sure there is no misunderstanding by either party about what will happen if they later dissolve their marriage. Statistics show that about 50 percent of first marriages end in divorce, 66 percent of second marriages are dissolved, and 72 percent of third marriages fail.

To avoid a messy divorce over financial issues, protect yourself by having a prenup prepared with the help of experienced family law specialists.  Attorneys that practice collaboratively have special skills for creating the prenup in a non-adversarial process. 

Filed Under: Blog Tagged With: Finances, Pre-Marital Agreement

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