Planning a wedding is an exciting time as you and your future spouse begin building your life together. One topic that is important for engaged couples to discuss but is often avoided is finances. Asking your soon-to-be spouse how much money they have or how much debt they owe may feel uncomfortable. But fully understanding each other’s financial situation is an important step in a healthy marriage. And part of any discussion about finances should include the subject of prenuptial agreements and whether they are right for you and your partner.
Understanding Prenuptial Agreements
Prenuptial agreements, also known as “prenups,” are legal documents that establish the property rights and financial rights of each spouse should the couple divorce. Prenuptial agreements are a very effective tool in financial planning, and they can be utilized by any couple, regardless of their overall wealth. A prenup is only valid once both spouses have agreed to the terms.
Prenups Can Specify Who is Responsible for Debt
Credit card debt, mortgages, and student loans. These are all very common debts. In Michigan, debts that are incurred prior to a marriage are considered separate debts. And, generally speaking, any debts incurred during a marriage are considered marital debts. But with a prenuptial agreement, the couple can specify which spouse is responsible for each of the debts in the event the couple divorces.
Prenups Provide Business Protection
If either or both spouses own a business, a prenuptial agreement can provide protection for that business if the couple divorces. Under Michigan law, if a business is considered marital property, then that will be divided according to Michigan’s laws of equitable distribution.
Prenuptial Agreements are Valuable Financial Tools
Prenuptial agreements are very effective financial tools that take the guesswork out of deciding what happens to property, a business, debts, or family heirlooms if a marriage ends in divorce. An experienced family law attorney can walk you through the basics of prenuptial agreements so you can determine whether a prenup is right for you and your future spouse.