When you are planning your wedding, the last thing on your mind is divorce. Also, the last thing you would want to talk about is money matters.
This is why it used to be very awkward to propose a prenuptial agreement. However, as more couples start to marry at a later age, they already have more individual assets accumulated. Thus, it is now worth the effort to enter a prenup or a premarital agreement.
Inclusions in Prenups
The key point in a premarital agreement is to protect individual assets from being included in the community property that must be divided between the two ex-spouses if they end up in divorce.
In the provisions of the prenuptial agreement, you may include provisions to protect yourself from your spouse’s debts. If you have children of your own, you can ensure that their needs are provided from your income and assets.
With prenuptial agreements, there is no such thing as looking too far ahead. You may actually include instructions for property distribution which will be a reference if you enter divorce proceedings. You can even state your estate plans.
Tax Returns in Premarital Agreements
If you will enter into a premarital agreement, legal experts would advise to exchange tax returns, whether personal or business, before they finalize their pact. Tax returns are important because in a prenuptial agreement, you and your future spouse will agree to waive certain rights to income and assets that are acquired through marriage.
You must remember that you should have a right to these properties and vice versa. For example, if you agree to buy a car. The value of that will be divided between you. Signing a prenup negates that. If you will enter into an agreement with another person, it is best that you have full financial disclosure.
A good lawyer will even recommend to exchange tax returns as far back as three years. You will have a clear idea of the true financial state of your fiancée which will prevent possible complications in the future.
It can also be very valuable for you so you can set your expectations on the marriage. Perhaps your prospective spouse has promised you grand plans to move into a posh neighborhood. Exchanging tax returns will allow you to properly gauge his capacity to deliver in that regard. Conversely, it can also set your spouse’s expectations. You may be a department head of a company, but if it is a startup company, the pay grade may be scaled down from industry standards. It is best for your spouse to understand that from the start.