A recent USA Today article focused on the resurgence in marriage after its decline during the economic recession.1 The article reported that there was a 5% decline in marriage rates during the recent recession, coupled with cultural changes about whether and when to marry, with two-thirds (2/3) of first marriages are being proceeded with cohabitation (living together), the projections in the coming years show a temporary boost in weddings. The article stated that “[t]he private company, Demographic Intelligence of Charlottesville, Va. Say the signs are right for a temporary boost in weddings, largely among the better educated and affluent and women ages 25-34.”
Many of our blogs at Dixon & Moseley focus on the very real legal problems couples face when the relationships and marriages do not work. However, what about the couples who maybe put of marriage for various reasons (i.e. to obtain more career success, finish college, wait for the recession to dwindle, etc.) and are now focusing towards a future with a significant other? Especially in light of the statistics showing that the boost in weddings in the coming years is largely attributed to the better educated and affluent demographic of women 25-34, who likely have had several years of career growth and job history? These statistics show that many more couples are entering into marriage with significant assets (or debts, i.e. student loans), and would potentially have much more to lose if the relationship were to not work out.
The question then is, how does one protect themselves for the future if they are entering into marriage with savings, 401k, possibly a house, or other assets, or in the alternative, if their partner has significant debt, such as credit card debt or student loans? Since Indiana follows the “marital pot theory,” meaning everything owned before and during the marriage is equitably (usually equally) divided upon dissolution of the marriage, that means that what you have before the marriage (asset or debt) is also divided equitably.2
The idea of prenuptial agreement scares many people, and they think they are planning for a divorce. This is not always true, and shouldn’t be a scary topic. Many people may also have misperceptions that prenuptial agreements are for the exceptionally wealthy, which is also not true. Admittedly, it is not a pleasant topic to approach as part of the wedding planning. However, divorce is a reality. Sometimes life, even due to everyone’s best efforts, does not always work out the way that you plan.
A prenuptial agreement, if drafted correctly, can protect each of the parties’ assets (and/or from the debts of the other) acquired before the marriage. If the marriage is successful, and the persons do not divorce, a prenuptial agreement is nothing but a piece of paper in a desk drawer. However, if the inevitable happens, the parties have some securities that at the least, what they had before the marriage is still theirs. A caveat to prenuptial agreements is that they are primarily for financial reasons, and not child custody, parenting time, or support, which is always modifiable and always determined based on the best interests of the child(ren).3 and 4
Every couple is different, and every situation is different, what is best for one couple, may not be the solution for another. However, to bear in mind when making the decision to marry what you own (or your significant other owes), is an important step in planning for the marriage, and should not be overlooked, as in the long run, it may be completely useless, or save you from financial ruin.
We hope that this blog post has been helpful in understanding the important and reason for prenuptial agreements. All cases are different, and to fully understand the best course of action in your situation, you may want to consider consulting with an attorney. Dixon & Moseley, P.C. practices throughout the state of Indiana. This blog post was written by attorney, Lori Schmeltzer.