The fact is, discussing finances can actually strengthen communication skills between couples, which lead to an even healthier, stronger relationship. More than that, it provides financial protection for both people in the event – unlikely as it seems – that the relationship ends. What kind of protection?
Don’t let the state decide
When a marriage ends, assets need to be divided. In California, the Family Code and Probate Code provides laws governing the dividing of assets, and in the absence of a prenup, these laws will be applied. Additionally, California law requires that community property be divided evenly if the couple did not decide beforehand how this should be handled. A prenuptial agreement lets you take matters out of the state’s hands and put them squarely in your own.
Protect assets acquired before the marriage
This may not be much of an issue for young people marrying for the first time, but those entering a second or third marriage or marrying later in life often bring significant assets with them into the marriage. If one partner is considerably wealthier than the other, a prenuptial agreement will protect those assets if the relationship ends. And the wealthy partner can be sure that the other is not marrying them simply for their money.
If there is large disparity in the amount of wealth that each person is bringing into the relationship, the spouse that is less financially well off may worry that they’ll be left high and dry in the event that the marriage comes to an end. They may want to ensure their financial security in case the marriage is dissolved, and a prenuptial agreement can outline the details of such an arrangement.
Just as one person may bring significant wealth into the relationship, a person could also bring a lot of debt into the marriage. The other spouse, understandably, does not want to be responsible for debt that is not theirs if the marriage ends. This can be avoided by a prenuptial agreement, delineating details of how this will be handled.
If one spouse is a business owner, the other could end up with a significant share of the business in the event of divorce. The business-owner spouse, as well as others involved in ownership/operation of the business, may not want this. Or they may have specific wishes in the event of the death of the business-owner spouse. These arrangements can be stipulated in a prenuptial agreement.
Prenuptial agreements are not all about money. They can also include such matters as how holidays will be handled or guidelines regarding children from previous relationships (although prenups in California cannot regulate child custody or child support), such as questions regarding religious training. These may not seem important enough to put down in writing, but they often become points of contention later on. A prenuptial agreement facilitates conversation about these issues and helps avoid misunderstandings in the future.