Prenuptial agreements are important for every successful couple to consider as they plan their lives together. They allow couples to control their financial futures in the event of divorce, an accident or death. Unfortunately, myths and misconceptions about prenuptial agreements can prevent couples from taking the proper steps to protect each other and their hard-earned assets in a worst-case scenario.
- Prenups won’t leave one partner destitute. Contrary to popular belief, a prenup isn’t designed to benefit the financially stronger partner and send the other to the poor house. The goal is to protect the assets each individual brings into the a marriage as well as those accumulated together, such as a house or business, and determine how those assets would be fairly allocated in the event of divorce or death. Divorce judges vary in Clark County, and it can be impossible to predict how the court will decide to divide a couple’s assets without a valid prenup in place.
- Prenups protect his, hers and yours. As more couples delay marriage until later in life, it’s common for each person to bring individual wealth into the marriage – finances, property, a personal or family business. Prenups ensure each person maintains what is rightfully their own should the relationship dissolve, and can make provisions for shared wealth acquired during the marriage. Nevada law generally exempts assets that one party owns before entering the marriage from division at divorce, but any increase in the value of those assets during the marriage may be subject to a claim.
- Prenups are about peace of mind, not pessimism. Gen-Xers and Millennials are the first generations to experience divorce on a grand scale, so while this demographic may approach marriage with optimism, it’s tempered with a healthy dose of pragmatism and a strong desire to safeguard the future. Unlike earlier generations, couples often enter marriage today on relatively equal footing financially. A partner who decides to leave the workforce to raise children can substantially reduce his or her lifetime earning potential. Couples need to address issues of alimony and property division at the get-go to an informed decision about whether either party is willing to scale back career ambitions to raise children.
- Prenups can evolve. Every prenup, just like every couple, is different, but a good prenup can serve as a lead-in to postnuptial planning as lives evolve and circumstances change. Some couples opt to add a sunset provision, which invalidates the prenup after a certain time or occurrence, such as the birth of a child. Others agree to renegotiate the terms to address evolving needs and financial realities. For many couples, such provisions can assuage concerns that a prenup is just a prelude to an inevitable divorce.
Brian P. Eagan is a partner at Solomon, Dwiggins & Freer.
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