How to Use a Prenup as a Financial Planning Tool
Moreover, they may already have a budgeting style that suits them and numerous financial goals that they hope to achieve. A prenuptial agreement is an essential tool for these couples, not so much as protection against a future breakup, but as a means through which financial plans may be discussed.
Unless you and your intended have already combined your finances (assets and debts too), you both may be in for surprises as you begin to explore each other's attitudes and approaches to money. One of you may be shocked to learn that the other does not have a budget, isn't particularly concerned about saving for retirement or has massive student loan debts and a credit score that horrifies you. It is far preferable to acknowledge and begin working on these issues prior to saying "I do" than while on the honeymoon.
The weeks and months that lead up to a walk down the aisle offer the perfect opportunity for laying open your financial situation to each other. Have a talk about how much debt each of you has. Do you have a plan for paying it off? If so, how much of a bite does that take out of your monthly budget?
Also, consider each other's assets. One of you may have amassed a significant retirement account while the other has virtually nothing. Is a new IRA in your soon-to-be spouse's future? If so, how will it be funded, and how much will go into it each year?
When you begin having discussions like these, then you can use a prenup as a financial planning tool. Maybe you recognize that your huge student loan debt shouldn't be the responsibility of your partner if you should ever split. A prenup could stipulate that you'll leave with whatever remains of that debt should the marriage end. Similarly, your spouse may want to be able to protect their considerable retirement account and provide for way to recoup an inadvertent commingling of inheritance money.
Using a prenup as a financial planning tool is a fantastic way to establish money goals as a couple. Take time to consider the lifestyle you want to lead as you discuss the financial future with your intended.
If you'd like to know more about using a prenup as a financial planning tool, then contact Sabra Law Group at (646) 472-7971 to schedule your Discovery Session.