Recently, we talked about the many protections a premarital agreement (commonly known as prenuptial agreement or prenup) offers engaged couples. Our family law attorneys want to continue this discussion. This time, however, we want to focus on the importance of full financial disclosure in prenups.
Full financial disclosure is critical when creating a valid agreement. Only when both parties disclose all financial information can they know what they are bringing to the marriage. Full disclosure in a prenup also helps you protect your property if you get a divorce.
We have observed that many people do not make enough effort to disclose their financial information. If the prospect of divorce arises, a lack of complete information can complicate matters. In turn, complications can neutralize the benefits of prenups.
For example, say that you and your betrothed used your prenup to outline property division upon divorce. If one of you failed to provide full financial information when signing the prenup, the other spouse could try to invalidate the document. Nondisclosure of assets is one of the most common ways a prenup becomes invalid.
Some financial information is often overlooked
Most people are not trying to hide anything in a prenup. In many cases, they do not believe the information matters or forget to include it. It’s essential to include:
- All sources of income — even that low-value investment account in your portfolio
- The value of each of your assets, including that old Mustang from your youth
- Details about debts, including your household expenses
We suggest looking at premarital agreements as foundations upon which to build the financial structure of marriage. Because no one enters a marriage expecting it to fail, it can be easy to withhold financial information, even accidentally. Explore more of our family law webpages for additional information about premarital and postmarital agreements.