Financial Planning & Premarital Agreements
Updated: Sep 7, 2019
Start by naming the things you want individually and the things you feel are important as a couple and as a family. Then come together and work out the priorities. What’s first, second, and so on.
A prenup (premarital agreement) is a great way to have this discussion.
The idea is to create a common overall vision. There may be some differences, but this is a great way to align your overall financial expectations and goals. From here, determine how the money will be managed - keeping separate accounts, joint accounts, payment for this hobby from that account or the other, and so on. There are many variations you can decide upon. Everything doesn’t have to be equal. The important thing is to discuss it and make plans for how your financial world will function.
Once you get married, certain rules apply such as the general rule that all assets and liabilities acquired after marriage are joint and will be divided equally in the event of divorce.
While there are some exceptions, consider this as the basic starting point.
In a prenup, you can address how these will be handled - regardless of whether you get divorced. For example, you can decide that the marital home will go to one party because it was purchased from that spouse’s separate money (or other reason) and that upon the death of that spouse, it will be inherited by that spouse’s children.
If you find that after you’re married a few years your circumstances have changed, your prenup can be updated. For example, you may have sold the home you owned before you got married and before you invest that profit in upgrades to your new marital home, you want to ensure that if you get divorced, you’ll get credit for that additional contribution before the calculation for the 50/50 split of the rest of the marital home. Keep in mind that any changes to your prenup must be in writing and signed by both parties.