When it comes to signing a prenuptial agreement there can be a lot of pros and cons. Deciding what should be included on them can be an even trickier weighing of pros and cons. But one thing that should definitely be included is what will happen with the debt.
What Happens to the Debt?
Standard inclusions in prenuptial agreements are: bank accounts, retirement accounts, family inheritances, real estate, and any businesses. The common assumption is that only people with money sign prenuptial agreements, in order to protect those assets. But, what happens when a couple decides to wed and that couple also has debt such as student loan debt, auto-loan debt, or credit-card debt? In the worst cases, what happens when this debt grows during the marriage?
Creating Prenuptial Agreements When There’s Debt
If a prenuptial has not been created, or does not include any clause that addresses debt, creditors are able to turn to marital or community property in order to satisfy someone’s debt. This means that if you marry someone with a large amount of student loan debt, and it’s not expressly indicated that that debt is there’s, you might be liable for paying it. This is why debt should be included in your prenuptial agreement. That way you’re not liable for your spouse’s debt if you decide to divorce. This clause should also state you are not liable for any additional debt that is created during the marriage.
Working with an Attorney
Working with an attorney to draft a prenuptial agreement can give you the opportunity to talk through financial decisions in a calm and logical manner without the pressure of feeling as if you are isolating your future spouse.
For advice on divorce or prenuptial agreements, you need the expert law firm of Korol and Velen, certified family law specialists. Schedule a free consultation today.
Source: Wall Street Journal Blog, Why a Prenup Needs to Include Debt, November 10, 2014
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