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Why You Need a Prenuptial Agreement

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Prenuptial agreements, contracts agreed upon before marriage about how to separate assets should the marriage fail, are controversial and often come up during wedding planning. Rather than looking at prenuptial agreements as unromantic jinxes, you should consider the benefits, says Raquel L. Sefton, a certified family law specialist at Sideman & Bancroft in San Francisco, Calif. "A prenuptial agreement gives you a road map on how to handle finances in your marriage," she adds. "A professional explains the rules and helps you decide things, such as whether to have joint or separate banking accounts."

Here, Sefton offers a list of reasons why you need a prenuptial agreement. Those of you who are already married might consider a post-nuptial agreement after reading this, but Sefton warns that those are more difficult - but not impossible - to accomplish because the courts require higher standards to prove them viable once you're married.

Prenuptial agreements force you to discuss money.

Money is a difficult subject for couples to broach, but a prenuptial agreement forces couples to have a conversation about finances, how they will be handled, and where you will stand financially post-wedding. It's a great starter talk about money issues, which is the No. 1 cause of arguments in a marriage. And it can even help raise issues about budgeting for the wedding and into the future.

It's an opportunity to get educated about the law and money.

Most of us realize that marriage is a contract, but we don't necessarily understand what we're signing up for, when it comes to finances, or how our state sees the particulars of marriage. When you visit a lawyer, who specializes in pre- and post-nuptial agreements, he or she will explain the rights you already receive by legally marrying. Specifics about issues, such as spousal and child support, will come up in the conversation. You can even decide to just spell out in the prenuptial agreement that you're all right with following the basics of the law without making special, customized requests that have either one of you giving up your rights.

Full-disclosure about finances and assets becomes a must.

When you spell things out in a prenuptial agreement, you must disclose ALL your assets and finances to one another - or the document might not hold any weight in court. This is a benefit for any spouse who is marrying someone who wants to keep money secrets, such as mountains of credit card debt or a bachelor pad he plans to keep after he says, "I do."

This money talk can help you see areas that need improving.

"For some couples having this kind of conversation reveals what they need to work on in the marriage and the deficits they have," says Sefton. "Are you going to be able to handle estate planning? Will you be able to have children and parent them together?" It is a big talk, but one that reaps many rewards both in the short and long term. Once you know where the problems or weaknesses lie, you can begin working on them.

You can protect your inheritance or business.

In the prenuptial agreement, you, with the help of your lawyer (you each should have your own counsel so everyone is on an even playing field), can write stipulations designed to protect your inheritance or business in case of divorce or separation. It's also a way to keep those things separate from your joint finances or assets. "You can jointly create wealth while preserving previous wealth," says Sefton.

Blending estate planning into the process helps look toward the future.

While you write a prenuptial agreement, you can include stipulations about the future, such as setting up a trust for the children you'd like to have. Besides laying out exactly how your finances will look and be doled out down the road, this eye on the future is another way to go deeper with this lengthy money talk. In other words, you'll be forced to talk about your present situation with finances but also about anticipating other life changes that will undoubtedly come up.

Having an agreement prevents headaches brought on by heartaches.

If for some reason you or your spouse decides to leave the marriage, you will be protected by the prenuptial agreement. It will allow you to get out of the marriage quicker, and there will be fewer messes to clean up when it comes to your finances and assets. In this way, a prenuptial agreement is peace of mind.

You'll learn about your spouse's true priorities and sentiments.

This might seem hard to believe, but Sefton says that couples rarely care much about money when negotiating prenuptial agreements. It's a revealing look into what your future spouse truly values - financially, but even more so sentimentally. "In my experience the actual dollar amount is never the issue," she says. "It might be the business is really important to them or Aunt Suzy's tea set is really important to them."

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