Did you know that 7 out of 10 marriages in Belgium end in divorce? The number is slightly lower, but still alarming, in Hungary, Luxembourg, the Czech Republic, Portugal, and Spain with more 60% of marriages ending in divorce.
The U.S. comes a close third at 53%, and Canada’s divorce rate stands at a conservative rate of 40%.
Marriage is a legally binding contract that two parties enter into in the hope of spending the rest of their lives together. The reality, however, is marriages break up and couples go their separate ways. While you should hope for the best, looking at current divorce statistics, it is a wise move to plan for the worst. Here are some of the top reasons people give for getting a prenup agreement.
1. To Safeguard Your Interests
If people plan for incapacity and death, prepare a Will, get Powers of Attorney, etc, why not plan for the more than 40% chance a marriage would end in divorce? Think of a prenup agreement as an essential legal document to protect you from an unpalatable likely eventuality. Marriage is a legal contract not unlike a business contract. Just as prudent businesspersons enter into contracts to safeguard their interests, a marriage contract safeguards the interest of the couples. A prenup agreement makes clear what the terms of a marriage contract are.
2. To Be Certain
If you are going to enter into a prenup agreement with your partner, have it done before getting married to make sure your partner understands what both of you are getting into. Dealing with this topic early on takes the pressure off your cohabitation or marriage. If not done early on, the emotional pressures and timing associated with prenup agreements could be used to argue for setting it aside.
3. To Allay Fears of Financial Loss
When the parties involved willingly and amicably participate in the prenup or cohabitation agreement, they eliminate the fear of financial loss and other concerns they may have. The resulting buy-in makes signing a prenup agreement a stress-free, less emotional process. You can use collaborative law or mediation to jointly develop a cohabitation or a prenuptial agreement.
4. To Reduce Stress
Essentially, a cohabitation or prenuptial agreement should benefit the two parties. It ensures certainty and helps couples avoid fees associated with protracted separation procedures. The goal of a prenuptial agreement is not to disadvantage either of the parties but to protect them based on what each expects from the union.
5. To Resolve Debt Issues
If one of the parties comes into a marriage with a heavy debt load, clearly explaining in a prenup agreement who is responsible for liabilities in case of a marriage breakup is important since the Matrimonial Property Act does not directly address debt.
6. To Safeguard Previous Relationships
If you have children from previous marriages to take care off, you can use a prenup agreement to safeguard their interests and ensure they are provided for. You can use the agreement to set aside certain assets for such children.
7. For Tax Planning
One can use a prenup agreement as a tool for tax planning. In the absence of a prenuptial or cohabitation agreement, the court is not duty-bound to consider the best tax planning approach to effect a division. However, where a prenuptial agreement is in place, the parties have a say on how they want the division effected. This gives them an opportunity to choose the option with minimal tax implications when dividing assets.
8. To Manage Expectations
Setting out what the terms of engagement are helps a couple to manage their expectations. By looking at their priorities and expectations, a prenup agreement helps a couple to deal with the pertinent financial matters and manage expectations early on in their relationship.
Prenup agreements are not easy to draft, but it helps to have a qualified family lawyer to draft an agreement that will stand a relationship’s fiercest tumults.