While many people have heard of a prenuptial agreement, they also tend to think that these agreements are solely for the wealthy. However, in a world where marriage rates are declining, divorce rates are increasing, and people are marrying later in life according to Our World in Data, a prenuptial agreement can be beneficial for couples whether they have extensive wealth or pennies in their pockets. The benefits of prenuptial agreements go far beyond simply protecting an individual’s cash wealth, and in today’s modern relationships, they are becoming increasingly common. If you would like to discuss how a prenuptial agreement may benefit your upcoming South Carolina marriage, a family law attorney with King Law Offices may be able to assist you. Call (888) 748-KING to schedule a consultation and learn more about how these agreements may help make your marriage a more secure and peaceful union.
What Is a Prenuptial Agreement?
Prenuptial agreements, also known as prenups or premarital agreements, are contracts between two people who plan to marry. The agreement lists the terms the two spouses-to-be agree to abide by if they divorce in the future. A prenup can also detail the assets they have as a couple and as individuals, among other marriage and divorce-related details. Sometimes, the terms of the prenup also cover the death of one of the spouses.
In South Carolina, prenuptial agreements must be signed at least 30 days before the wedding or they may not be considered valid and enforceable in the event of a divorce. Additionally, prenups cannot contain details related to child custody or child support. These two issues are to be decided either through negotiation between the couple upon divorce or by the court. Inclusion of child custody or support in a prenup will invalidate those portions or may invalidate the entire agreement. Other issues that will not be enforced in a prenuptial agreement include any illegal provisions (such as requiring a spouse to go along with illegal activities or dividing earnings from illegal businesses), and personal issues (such as where to spend holidays, handling of household chores, or a spouse’s personal appearance).
Financial Benefits of Prenuptial Agreements
Many people are most familiar with the idea that prenuptial agreements offer financial benefits. They may understand that these agreements may stipulate certain financial arrangements between the couple, such as that if one spouse is a stay-at-home parent for the duration of the marriage, they will receive a certain amount of money upon divorce in addition to spousal support to help them be financially secure as they re-enter the workforce. But there are several other financial benefits a prenup can offer.
Debt Management
From student loans to credit card balances, many people have debts before they get married. Whether they are small amounts of debt or large amounts that may have significantly impacted their credit, the individual may not want their spouse to feel obligated to help pay these debts or the spouse may want it to be clear that they will not be responsible for them.
Prenuptial agreements protect both spouses in these situations by outlining how the existing debts of both partners will be paid, who is responsible for these debts, and other details. This can be particularly important if the spouses wish to remain individually responsible for some debts, but jointly responsible for others. For example, the spouses may agree that each will be responsible for their own credit card debt but that they will share one spouse’s mortgage debt because they will both be living in that house now.
Financial Clarity
Prenuptial agreements can provide financial clarity by establishing clear financial rights and responsibilities for each spouse. This may include detailing how to handle bank accounts (such as combining bank accounts, keeping separate accounts, or a combination of separate and joint accounts), credit card debt, and personal and joint expenses incurred during the marriage.
This can go so far as to specify which bills each spouse will pay. However, it is advised to use caution in getting too detailed regarding these bills as these may change over time for various reasons. Instead, couples should try to include larger expenses, such as mortgages, motor vehicle loans, or personal loans.
Financial Independence
Prenuptial agreements allow couples to come to agreements about how their finances are handled during the marriage and how they will be handled if the couple divorces. By doing so, couples can more reliably plan their financial futures and ensure they are financially independent if a divorce occurs. From details regarding alimony to how the marital debts will be divided, couples will be able to assess their financial circumstances even before filing for divorce to determine how stable their finances will be after the divorce and determine what they may need to do to improve their situation.
Spousal Support Terms
The prenup may stipulate who will pay spousal support, how much, and for how long, allowing both spouses to consider what their financial needs would be after a divorce with the paying or receiving of spousal support in mind. This not only assists with promoting financial independence, but also can provide a lower-income or stay-at-home spouse to feel more at ease, knowing that it is already agreed upon that they will receive some funding after divorce while they return to work or attend school to be able to seek other opportunities.
If the couple wishes to waive spousal support, they can do so in a prenup. However, it is important to remember that the terms of a prenuptial agreement are legally binding. This means that if circumstances change and a spouse who waived their right to spousal support changes their mind, they may not be able to do so without either convincing their spouse to sign a postnuptial agreement or being able to prove to a court that there is a valid reason to invalidate the prenup.
Asset Protection Benefits Offered by Prenups
Cash and bank accounts are not the only things that are impacted by both marriage and divorce. Upon getting married, any assets one spouse purchases are considered a joint or marital asset. Upon divorce, these marital assets are distributed between the divorcing partners. Prenuptial agreements can assist with defining these assets, distributing the assets, and backing up an estate plan.
Defining Marital vs. Separate Property
S.C. Code §20-3-630 stipulates that all real and personal property acquired by either spouse during the marriage and which is owned as of the date the divorce is started is considered marital property. However, it also states that there are some exceptions, one of which is antenuptial agreements, which is another name for prenuptial agreements. Property acquired prior to the marriage is considered separate property and remains so unless the couple agrees otherwise or the spouse that owns the separate property takes an action that turns it into marital property, such as using the separate property to fund a marital asset.
Couples can use a prenup to clearly define what is each couple’s separate property and what is marital property. This can include stipulating whether certain assets purchased during the marriage might remain a separate asset.
Protecting Businesses
From family businesses to partnerships to solo operations, many people enjoy operating their own businesses today. A business started during a marriage is marital property, but dividing the business is quite difficult, as it requires determining the value of the business, how many shares each spouse would be entitled to, and if the business owner cannot afford to buy out their spouse, being able to work together to make decisions for the business. This can lead to continuity issues for the business and uncertainty and worry for any employees. Even if the business was started prior to the marriage, if a spouse made any contributions, they may be entitled to a share of the business.
A prenuptial agreement allows a couple to agree that the business is separate property that is not subject to division in a divorce. Alternatively, they can also agree about which spouse will keep the business (this is often done when the spouses start the business together) and what assets the other spouse will receive in the asset division to ensure a fair distribution of assets. If an individual wishes to protect a business in a prenuptial agreement, a family law attorney with King Law Offices may be able to assist with drawing up an agreement that is fair and ensures the stability and continuity of the business despite a divorce.
Distributing Assets
A prenuptial agreement can also be used to distribute assets in the event of a divorce. The court does not have to distribute assets for the couple. Couples can negotiate their own property distribution, and unless the court deems it to be extremely unfair to one spouse, their agreement will be incorporated into the final divorce decree. Once a divorce becomes reality for many couples, negotiating a fair agreement can become difficult.
By discussing how they would divide assets even before marriage, couples can remove some of the emotions that arise during divorce. Including these agreements in their prenup ensures that whatever they agreed to during calmer, happier times is still carried out, even if emotions run high and they want to make unfair or unrealistic demands to try to hurt each other.
Backing Up Estate Plans
When combined with a comprehensive estate plan, a prenuptial agreement can help to ensure that an individual’s estate is divided exactly according to their wishes. This can include outlining the specific details of who gets certain assets or having one or both spouses waive their right to an elective share. This can be particularly important for couples who have children from previous relationships and want to ensure that those children receive an inheritance and a new spouse does not unfairly take assets they are not entitled to or that the deceased wanted to distribute to their children.
Prenuptial Agreements Offer Child Protection Benefits
Prenuptial agreements cannot include child custody or child support details. However, these agreements can still include details that offer protection to both the couple’s children from previous relationships as well as any children the couple has together.
Protect Children From Previous Relationships
Prenuptial agreements can protect children from previous relationships by allowing their parent to protect their future inheritance. The parent can state how their assets are distributed if they pass away so the new spouse does not claim those assets as their own. The parent can also stipulate any assets that are not to be considered marital assets, such as if the parent was widowed and the deceased spouse left assets specifically for their children.
Parents may also make other stipulations in a prenup that protect their children from previous relationships. They may stipulate that child support received for those children remains separate from family funds, or have their spouse waive any right to spousal support to ensure they can afford child support for children from both the current and previous relationships after a divorce.
Protect Children From the Current Relationship
Parents can protect any children that result from the current relationship with a prenuptial agreement as well. While they cannot include child custody or support, they can include other details that will protect these children. For example, they may stipulate specific assets that are to go to these children if the parent dies. They may also make agreements such as whichever parent receives custody of the children will also keep the marital home to provide the children with stability.
Additional Benefits of Prenuptial Agreements
Prenuptial agreements have several additional benefits that are more than simply protecting assets. These benefits can help strengthen a marriage and perhaps make it more likely to last by incentivizing the marriage.
Encourages Open Communication
Prenuptial agreements require full financial disclosure before the marriage in order to be legally valid and enforceable in the event of a future divorce. Finances are often a difficult topic for many couples. Midwest Community Credit Union reports that 91% actively look for reasons to avoid discussing finances with their partners. By bringing finances to the table in such a frank way with a prenup, couples have one of the most difficult conversations they can have before they are even married.
Not only can this make it easier for them to discuss finances again in the future, but it also opens them up for more transparency and open communication regarding other topics. This can create greater intimacy, radical honesty, and a stronger relationship because the couple does not feel they need to hide anything from each other.
Assists in Conflict Resolution
Prenups assist in conflict resolution in multiple ways. One way a prenup assists in conflict resolution is by actually resolving some of the more common sources of conflict. By outlining details regarding asset distribution, spousal support, or other issues, couples reduce the areas of potential conflict that may arise in a divorce. When these decisions are already made, there is no need for conflict because the decision is already included in a legally binding document.
Another way prenuptial agreements may assist in conflict resolution is by allowing couples to dictate terms around conflict. For example, couples may agree that before filing for divorce, they will attend both individual and couples’ counseling or that if they argue about the same topic more than a specific number of times, they will seek a qualified third party such as a therapist or mediator to assist them in resolving the issue. These types of terms can not only give the couple more tools to deal with conflict but also provide them with alternatives to divorce for dealing with larger problems.
Provides Peace of Mind
For some couples, one spouse staying at home to raise children is very important. To others, both spouses working is critical, but one spouse may have a lower income and worry about what may happen if they divorce. Prenuptial agreements that specify that the stay-at-home spouse or lower-income spouse will receive a certain amount of spousal support, be provided with an additional amount of money in addition to spousal support, be given certain assets to assist in getting back on their financial feet, or otherwise offering transparency regarding how they will be cared and provided for in a divorce after their sacrifice can provide that spouse with peace of mind.
On the flip side of that, if one partner has significantly more wealth than the other and is concerned about losing much of that wealth to spousal support in a divorce, prenups can also offer peace of mind. By agreeing that the lower-wealth spouse will get a certain amount in spousal support but no more, the higher-wealth spouse can feel comfortable knowing that will be able to provide for their spouse in a divorce but that they will not potentially lose all their money to this support.
Avoids Lengthy Legal Battles
One of the most complex parts of divorce is the legal battles that can arise. From who should have child custody to how to divide the marital assets, some divorcing couples can find themselves engaged in lengthy legal battles as they each try to get what they want. These legal battles can be incredibly expensive and ultimately very frustrating, even if the individual eventually gets what they wanted.
A prenup allows the couple to discuss some of the matters that are most likely to become heated, lengthy court battles when cooler heads and emotions prevail. While they cannot include child custody or child support, the couple can agree on asset distribution and other high-conflict topics of divorce.
What If I Am Already Married?
Sometimes, couples do not think about a prenup, but after they are married, one or both spouses may realize that they could have benefited from having one. Whether it is to protect their children from a previous relationship, protect assets they did not think needed to be protected or did not anticipate having before they got married, or to protect a business they are starting, the realization that they can no longer create a prenuptial agreement may worry these individuals.
However, there is another option. For couples who are already married, postnuptial agreements are an option. Postnuptial agreements, or postnups, are exactly like prenuptial agreements, except they are created and signed after the couple is married instead of before. Postnups can be enforced just like a prenup. The same limitations exist in the terms that cannot be set by a postnup, including no illegal activity, no child custody, and no child support. Additionally, a postnup cannot be signed after the divorce has already been filed, and it cannot be signed in anticipation of a divorce. In other words, if one or both spouses have already decided on or are considering a divorce, they cannot sign a postnup.
How a South Carolina Family Law Attorney Can Assist You
Modern relationships have shifted from the traditional idea of a man providing for his family while a woman stays home and cares for the children. Women have high-powered and high-paying careers of their own, which they may not wish to give up upon marriage. If they do, they may want to know that this sacrifice will be accounted for in a divorce. Men who choose to give up their career to be the stay-at-home parent want the same reassurance. Couples who are going into second or third marriages want to protect children from previous relationships, and many couples have separate assets that they are unwilling to co-mingle with their spouse’s assets. In today’s relationships, where blending families and remaining financially independent can occur in the same marriage, prenuptial agreements help protect both spouses and all of their children. At King Law Offices, our South Carolina family law attorneys may be able to assist you with preparing a prenuptial agreement that meets your needs. Call (888) 748-KING to schedule a consultation and learn how a prenup or postnup may make your marriage stronger while also protecting you in the event of a divorce.