On behalf of The Marks Law Firm, L.L.C. posted in Family Law on Wednesday, September 29, 2010
“Honesty is the best policy” has been an adage passed down from generation to generation. In this day and age when tuition for an upper level degree is at an all-time high, many people across the nation have large amounts of student loan debt. Debt can be a serious point of contention in many relationships, so when do you apply the honesty policy?
One San Francisco graduate found out the hard way when her fiancé called off their engagement three days after learning of the exact amount of debt she owed. He knew she had some debt, but after they took out the loan papers and found out it was close to $170,000 he accused her of lying. “If I was lying,” she admitted, “I was lying to myself, not to him. I didn’t really want to know the full amount.” Whether or not their specific relationship would have lasted is unclear, but there was one tool the couple could have utilized, the prenuptial agreement.
I know, most readers are thinking that prenuptial agreements are only for the wealthy. What is there to protect when your debt is significantly higher than what you are making? A prenuptial agreement forces couples to be honest with themselves and their future spouse. In order for the agreement to be valid, there must be full disclosure of each person’s complete financial status, all assets and all debt. The agreement can protect people like the fiancé who had no debt and feared entering into a relationship with a person who seems to be swimming in it.
A prenuptial agreement would not just protect the person without the debt. A higher degree generally means a higher earning power which, in some states, can be an asset to be divided during divorce if it was obtained during the marriage. What is especially helpful to couples is the creativity and freedom a prenuptial agreement affords. A couple can choose exactly what they want it to say, exactly how their assets should be divided in the event of a divorce.
Divorce is not an option for some a lot of couples planning to enter into marriage, but a prenuptial agreement can still force them to talk about issues that could affect their marriage in the future and how each spouse feels about those issues. Take for example if one spouse were to lose their job, how would they handle the situation? If one spouse suddenly expressed the desire to be an at home parent, would the other spouse help make that possible? In situations like these, honesty probably still is the best policy.
Source: The New York Times “How Debt Can Destroy a Budding Relationship” Ron Lieber 9/3/10