Three Reasons to Have a Prenuptial or Financial Agreement
According to Israeli law that was set in 1974, every married or unmarried couple that is in a relationship and shares a household is subject to what is known as halachat shituf, a law of partnership and shared property that indicates an equal division of assets for a couple. The only way to have any alternate arrangement is through a prenuptial or financial agreement.
Prenuptial or financial agreements are particularly important for couples who bring various personal or business assets with them to a partnership, but it can also be beneficial to discuss intent regarding future assets. As a recent article indicates, prenups are becoming quite common, particularly among millennials. This demographic tends to marry later and come into marriage with assets, and a high percentage of them have come from homes with divorced parents, thus they know the importance of maintaining one’s own and mutual interests.
Prenuptial and financial agreements can be updated and changed over the course of a partnership, thus it is possible to adjust the document if a couple wishes. It is important to note that this agreement only applies to assets, so a couple cannot include stipulations about division of labor in the household in this agreement.
In our experience, there are three main reasons to prepare a prenuptial or financial agreement.
- It allows you to clearly articulate your expectations and protect existing assets. A prenuptial or financial agreement allows you to indicate which assets belong to each person and which assets are shared. This avoids any complications with assets you bring to or acquire during the partnership, allowing a clear demarcation of what belongs to whom.
- It allows you to protect and dictate the division of an inheritance. Generally young couples without many assets do not consider future assets they may acquire, such as an inheritance from a grandparent or parent. In the event the couple separates, a partner can request a division on the interest obtained from an inheritance, which can be significant. A prenuptial or financial agreement can stipulate this division ahead of time, considering possible future outcomes.
- It allows you to protect assets for your children. This is of particular importance when an individual seeks to remarry and they already have children from a previous marriage. In the event both partners already have their own children, if they do not have a prenuptial or financial agreement, and they later separate or one person passes away, the children of one partner can demand an equal share of property and assets from the other partner. If one wishes that their assets are preserved in the interests of their biological children, it is important to indicate this in the prenuptial or financial agreement.
It is an easy and straightforward process to prepare a prenuptial or financial agreement. While it is possible to do this with a notary (so long as the couple is not yet married), it will demand extra steps to put the agreement into effect in the future if it is not approved by a court verdict. Thus, we recommend that a couple sit with a lawyer who can write a prenuptial or financial agreement tailored to the couple’s present and future interests, and this lawyer can assist in obtaining court approval. As a result, it will be straightforward to indicate to whom and how assets are designated. In the event a couple is already married, any financial arrangements must be approved by a court verdict.
Contact us for legal assistance in drawing up, notarizing, and obtaining a court verdict for a prenuptial or financial agreement.