Anecdotes and research reveal one consistent enemy of marriage: money. While money, or lack thereof, alone does not end marriages, a couple’s inability to discuss and agree on how to manage finances is a culprit that slowly chips away at the relationship.
Some have attempted to combat this reality by separating their finances, holding separate bank accounts, purchasing property in their own names, and taking out debt individually. However, what one partner does during the marriage with his/her money and property still affects the other partner.
Worse, if the marriage does fail for disagreements about money, or any other reason, everything owned by either partner becomes marital property and is fair game during a divorce. Thus, separating finances neither guarantees success during marriage nor does it protect your money and property during the divorce.
Rather, the only way to improve your odds of success is to have a frank and in depth discussion and agreement on finance management prior to the wedding date or shortly thereafter. The discussion and agreement should include topics such as financial goals, monthly budgets, spending habits, spending responsibilities, debt priorities and liabilities, career goals, and each party’s expected earning potential. It should also cover how income and property will be divided in the event of death or divorce, also known as a prenup.
There is a false perception that getting a prenup predisposes a marriage to failure or that it indicates a lack of commitment. This misconception is often based on movies or anecdotes of when a wealthier partner sprung a prenup on the poorer partner the morning of the wedding, threatening to cancel the event if the poorer partner didn’t sign a prenup that basically screwed over the poorer partner. Note, if your partner ever does that to you, cut your loses the morning of and run! That is not a person that loves you, respects your views, or cares about you financial well being. Also, do not pull such a trick yourself because it is quite likely that the court will find the prenup invalid, causing you to spend tens of thousands of dollars first disputing the prenup and then fighting for property during the divorce.
On the contrary, a prenup, when drafted and signed after the frank and in depth discussion, is an effective tool that memorializes the finance management agreement. By clarifying the party’s financial roles, rights, and responsibilities, the agreement reduces future fights about money, thus, reducing their risk of divorce. Yet, in the event that the marriage ends for other reasons such as infidelity or growing apart, the prenup will serve to protect those rights and responsibilities as well as to significantly reduce attorney frees and court costs as there will be less to fight about in court.
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