There is a misconception that only the wealthy should draft prenuptial agreements before marriage. In reality, many couples can make use of these agreements, particularly when there is a disparity in wealth.
Determining whether you should implement a prenup requires a review of your and your partner’s current financial situations. You will also need to know what these documents are capable of so yours remains compliant with relevant laws and guidelines.
What prenups can do
A prenuptial agreement establishes a plan for what will happen to your assets during a divorce. With a prenup, you can establish who owns what going into the marriage so there is no confusion should divorce be on the table later. This makes it much easier to tell the difference between marital and non-marital assets.
While they are often viewed as “un-romantic”, prenups can actually spare you a lot of headaches. They also allow you and your soon-to-be-spouse to have an open and honest discussion about finances before marriage, so you are both on the same page when it comes to finances.
And what they cannot
Of course, divorces entail more considerations than asset division. If you have children, you will also need to make decisions about child custody and support. Some couples believe these decisions, which can be quite contentious, are best dealt with using a prenup, but this is not actually true. Although you are encouraged to come up with a reasonable parenting plan with your ex, only the court can render decisions on custody or support.
Prenups also cannot contain any clauses that would not be upheld in a court of law, such as clauses related to household chores or intimate relations. You will also need to make sure your prenup abides by any state laws. In Alaska, prenups are only considered legitimate when the terms are voluntarily agreed upon by both spouses. The document must also be in writing, so a strictly verbal agreement would be invalid.