California residents should know that roughly 44% of first marriages and 74% of second or third marriages end in divorce. Even if a couple doesn’t get a divorce, a spouse may pass away because of old age or other causes. Regardless of why a marriage ends, it could take a significant emotional and financial toll on a person. The use of prenuptial and postnuptial agreements may help a person prepare for the possibility of a marriage ending.
The biggest difference between a prenuptial agreement and a postnuptial agreement is when it is reached. Prenuptial agreements are reached before the wedding takes place while postnuptial pacts are reached after the wedding takes place. Generally speaking, a prenuptial contract is ideal for those who are bringing significant assets into a union. They can also be worthwhile for individuals who want to protect themselves from a future spouse’s debt or who expect to receive a large inheritance.
Postnuptial arrangements can be beneficial when it comes to determining how to divide joint assets. Typically, any money or tangible assets accrued after the marriage becomes official are labeled as joint assets. Couples often choose to create them as a way to revive a struggling marriage or because there wasn’t enough time to negotiate a proper prenuptial contract.
The use of a custom marriage agreement may allow for greater asset protection in the event of a divorce. For instance, the contract could stipulate that a business owner can retain a majority stake in his or her company if the relationship were to fail. It could also say that each person is liable for any separate debt brought into the marriage. This may reduce the chances that a person has to sell a car or house to pay off an outstanding balance.