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Why is financial disclosure in a prenup important?

| Oct 9, 2020 | Prenuptial Agreements |

A prenuptial agreement can give you and your spouse peace of mind as you begin your life as a married couple. In the event you decide to end your marriage, your prenup can resolve many financial conflicts before they have a chance to arise. In drafting your agreement, however, you want to be sure that you have listed all the financial information that you should include. 

As Kiplinger points out, putting in too little information is not a good idea. For a number of reasons, you might find that omitting key information about your finances could jeopardize your agreement. 

You may lose out on money or property

The main goal of a prenuptial agreement is to protect money or property that you own from division in a divorce. If you fail to disclose assets like a business and designate them as separate property in your agreement, it may become harder to prove that those assets are not marital property if your marriage ends in divorce. Consequently, you may lose a portion of assets that you could have kept otherwise. 

It provides an inaccurate picture of your future

You may have reasons to keep certain financial information private. Even so, not revealing assets and liabilities can provide your spouse with a distorted picture of your financial situation, making it harder for your spouse to make informed decisions about what the financial situation of the marriage will be like in the future. This distorted view can lead to poor decision making and legal ramifications if your spouse finds out you omitted information. 

A judge may invalidate the agreement

Depriving your spouse of financial information is something a judge will likely disapprove of. If your divorce should become contested, leaving asset and liability information off your prenup can provide your spouse an opening to challenge the agreement in court. Depending on the circumstances, the judge might void some of the agreement or all of it.