Why an Economic Downturn is a Good Time to Consider a Prenuptial or Postnuptial Agreement

A prenuptial agreement can help two people clarify their expectations and plans surrounding financial matters before marriage. Similarly, a postnuptial agreement can help two spouses align their understandings and expectations around the family’s finances. 

During an economic downturn, households throughout the United States reconsider their economic situation. For many Oregon and Washington couples, this also means weighing whether a prenuptial or postnuptial agreement is a valuable addition to their planning. A previous agreement may need to be revisited, or a new agreement may need to be created. 

Why Does an Economic Downturn Call for a Prenuptial or Postnuptial Agreement?

An economic downturn can affect a marriage – and a divorce – in several ways. Common examples include

  • An economic downturn may affect the value of certain assets held by one or both spouses. Stock values drop during downturns, for example, leaving less for a couple to divide – or for one spouse to receive – during a divorce. If this discrepancy is too large, a pre- or post-nuptial agreement that was supposed to create an equitable property distribution may no longer do so. 
  • Different assets may experience different effects during a downturn. For instance, stock in technology companies may decrease in value far more than real estate holdings – or vice versa. An agreement that states one spouse will receive the couple’s stock while the other will get the real estate, for instance, may no longer represent an equitable distribution of property. What was once an agreement a court would accept may no longer hold up during a divorce.
  • You and your partner may hold different views about how to weather a downturn. Which assets should be sold? How much of your holdings should you convert to cash? A pre- or post-nuptial agreement requires you and your partner to have conversations like these, so you can make unified decisions in your best interests – and so you can reduce stress and obstacles if you decide the marriage should be dissolved. 
  • Your economic situation may change significantly during a downturn. The closing of a business, a lost job in an industry that shrinks, and other obstacles during an economic downturn may put you, your partner, or both in an unforeseen position. Creating or revising a pre- or post-nuptial agreement can reduce uncertainty. 

Questions to Consider When Thinking About Pre- or Post-nuptial Agreements

During a recession, financial conversations get tougher. Similarly, divorce proceedings tend to be more contentious. A pre- or post-nuptial agreement can help you and your partner have tough conversations in a structured setting. It can also set ground rules that make separation easier if you eventually decide to divorce. 

Questions to consider when entering pre- or post-nuptial agreement conversations during an economic downturn include

  • How will we handle the family home and other real estate? Rising mortgage interest rates can affect how spouses decide to divide the family home and other real estate holdings in the event of a divorce. The cost of refinancing a house, for instance, may make the decision to try to keep that dwelling less attractive than it was when rates were low. 
  • How will we monitor the value of investment accounts? Economic downturns make it difficult to estimate the value of various investment holdings accurately – especially when the market becomes volatile and the value can change rapidly. Deciding how to monitor the value of these accounts can become part of the conversation surrounding a pre- or post-nuptial agreement. 
  • How will we ensure that our children have what they need? In a recession, it becomes more difficult to meet the costs associated with children’s needs, from basic supplies to school fees, the cost of private lessons, and funding a future college education. When you create or revise a pre- or post-nuptial agreement, you and your partner can have frank conversations about how you will ensure your children’s needs are met. 

Pre- and post-nuptial agreements are tailored to each couple’s needs, plans, and goals. As you and your partner discuss creating or revising an agreement, other questions related to your specific situation will arise. The pre- or post-nuptial agreement allows you both to speak your mind, understand one another’s concerns, and create an arrangement that supports both you and your children.

If you want more clarity on financial matters surrounding your upcoming or existing marriage, talk to the experienced prenuptial and postnuptial agreement attorneys at Gearing, Rackner & McGrath today. We’ll help you and your partner communicate effectively and put your plans and expectation into clear terms.

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