If you are engaged to be married, congratulations! Marriage can be a wonderful way to formalize a committed relationship. However, marriage is not without financial risk. One way married individuals can mitigate the financial risks associated with marriage and protect their financial future is by creating a prenuptial agreement.

Prenuptial agreements are becoming more and more popular, especially among millennials. In a study conducted by the American Academy of Matrimonial Lawyers, over 60 percent of the lawyers surveyed noticed an increased number of engaged couples seeking prenups. The increase is not surprising given the significant benefits associated with prenuptial agreements for both spouses in a marriage.

Top Benefits of Utilizing a Prenuptial Agreement

Prenuptial agreements, or prenups, are often misunderstood. These legal tools are not only useful for extremely wealthy couples. They provide benefits for married individuals of all ages, lifestyles, and income levels. Prenuptial agreements can provide benefits including:

As a business owner, the way you make a living differs from a typical “9 to 5” job. The business is more than just a source of income, it is a long-term investment that you have probably poured your heart and soul into. Protecting your business is crucial. This is one reason many business owners and entrepreneurs choose to sign a prenuptial agreement when they get married.

Benefits of a Prenuptial Agreement for Business Owners

If you are getting married, you may be interested in learning more about the benefits of a prenuptial agreement or “prenup.” These legal tools are becoming increasingly popular for a number of reasons. Most importantly, a prenup protects business assets in the event of divorce. The divorce rate hovers around 40-50 percent, so preparing for this possibility is important for any engaged person.

In Illinois, equitable distribution laws require courts to divide marital property equitably or fair with regard to the spouses’ circumstances in a divorce. Businesses that were established during the marriage are usually non-marital property not subject to division. However, many different situations can cause a business to be considered either partially or fully marital property. For example, the non-owner spouse may be entitled to a share of the business’s value if he or she contributed time, money, or labor to the business. Through your prenuptial agreement, you can identify the business as non-marital property which is separate from the marital estate. Alternatively, you can establish each spouse’s share of the business interests and liabilities. You can also designate how any appreciation in the business’s value should be divided upon divorce. Doing this in advance can simplify divorce proceedings considerably.

If you are engaged, you may be thinking about the advantages of creating a prenuptial agreement with your soon-to-be spouse. There are considerable misunderstandings and misconceptions about prenups. However, more and more people are recognizing how beneficial these marital agreements can be. If you are getting married and you are on the fence about getting a prenuptial agreement, consider the following.

Prenuptial Agreements Are Increasingly Popular Among Younger Couples

Prenuptial agreements are becoming more and more popular among younger couples in the U.S. Many people in their 20s and 30s have divorced parents. They recognize that divorce is a possibility even in the happiest relationships. Therefore, it is best to be prepared for this possibility. Many millennials also have substantial assets and debts that they want to protect in the event of divorce.

A Prenup Can Protect Your Property Rights if You Divorce

One of the main uses of a prenuptial agreement is differentiating between marital and non-marital assets. In a divorce, marital assets are divided between the spouses. Non-marital assets stay with the spouse who originally owned the asset. A prenuptial agreement allows you to dictate which assets are marital and which are non-marital. For example, if you own a small business, you may want to ensure that the business is your property alone and does not get integrated into the marital estate. A prenup allows you to do this.

Talking to your partner about creating a prenuptial or postnuptial agreement may feel uncomfortable or unnecessary. However, considering that arguments about finances are one of the strongest predictors of divorce, there is clear value in openly discussing finances with your spouse and creating a mutually beneficial, legally binding document that addresses each spouse’s financial and property interests. If you chose to forgo a prenuptial agreement before getting married, it is important to know that it is not too late to secure the same benefits through a postnuptial agreement.

Reasons to Pursue a Postnup in Illinois

For many couples, the time before their marriage may seem too early in their lives and relationship to be worried about what happens to their property in the event of a divorce, especially if neither spouse has significant assets to their name. However, much can change throughout the course of the marriage when it comes to the couple’s financial situation and their outlook on life. With these changes often comes a more clear need to work together on a postnuptial agreement.

Perhaps the most common reason to establish a postnup is a large increase in marital or non-marital assets. For example, if you have acquired a business during the marriage, or if a business that you previously owned has increased substantially in value, it is often a good idea to establish in writing the financial interest that each spouse has in the business. Alternatively, if you or your spouse has been the beneficiary of an inheritance, it may be important to definitively establish its status as non-marital property. If you choose, your postnuptial agreement can address all assets belonging to the marital estate and each spouse individually. Doing so can prevent confusion, uncertainty, and conflict if you ultimately have to divide your property in a divorce.

A prenuptial agreement can help both you and your spouse enter your marriage with peace of mind regarding your finances, and if your marriage later ends in divorce, a prenup can make the process much easier by laying out the terms for property division and spousal maintenance. However, in order for the agreement to take effect and be upheld by the court at the time of your divorce, it must be legally valid. There are a few things that you can do when creating your prenup to make sure that this is the case.

Establishing a Legally Valid Prenup in Illinois

As you prepare to draft your prenuptial agreement, consider these suggestions to ensure the agreement is enforceable:

• Make sure the agreement is written and signed. A valid prenup must exist as a written document. Verbal prenups are not legally binding, nor are written prenups that have not been willingly signed by both partners.
• Be open and honest with your partner. Concealing or lying about your assets and debts when creating a prenup results in an agreement in which your partner does not have the information necessary to make a decision. If evidence comes to light that you were dishonest with your partner about your property and financial situation, your prenuptial agreement will likely be considered invalid.
• Aim for an agreement that is fair. Each individual or couple has different priorities when creating a prenup, and what is acceptable to you and your partner may be different from what is acceptable to another couple. However, it is important to ensure that the terms of your agreement would not cause undue hardship to either party in the event of a divorce. If the court determines that an agreement is not equitable, it may decide to award spousal support in a way that differs from what the agreement stipulates.
• Avoid addressing child-related issues. Illinois law states that a prenuptial agreement cannot negatively impact a child’s right to support, so it is important to ensure that any of your minor children will have access to child support no matter the terms of your agreement. A prenuptial agreement also cannot address parenting time or parental responsibilities, so those matters will need to be addressed separately during the divorce process.
• Consider updating your agreement over time. An agreement created before your marriage may lose relevance over time as your financial situation changes. If you or your spouse believes that the original agreement is no longer fair or suitable, you have the option to amend it to better reflect your current needs as long as both of you agree to the changes.

Contact a DuPage County Prenuptial Agreement Lawyer

Another way to ensure that your prenup is legally valid is to create it with the assistance of a qualified Wheaton family law attorney. At the Davi Law Group, we will work with you and your partner to help you reach an enforceable agreement that meets your unique needs. Contact us today for a free consultation at 630-504-0176.