Dear Carrie, My fiance and I are both in our mid-30s, so we've each had time to accumulate some assets. I'm thinking we should have a prenuptial agreement, but he thinks it's a betrayal of trust. What do you think? —A Reader

Dear Reader, In my opinion, there are a lot of positive reasons to have a prenuptial agreement. While I understand your fiance's hesitation — so often a prenup is associated with divorce — to me it's not a sign of distrust. In fact, creating a prenuptial agreement takes a willingness to be completely open and honest about everything — what you own, what you owe and how you want to live your financial lives together. That takes absolute trust.

Plus, there's a basic tenet in any prenup that you can't include anything that a court would consider "unfair" to either of you. There's lots of room for different arrangements, but fairness is a given.

That said, a formal prenuptial agreement is most important if either one of you has considerable assets, large debts or kids from a previous marriage — anything that makes your finances more complicated. If this isn't you, a formal agreement is less necessary. Every couple, though, should provide complete financial disclosure and share their feelings about money. This will undoubtedly head off disagreements down the road and create a closer bond.

Here are some practical financial issues I believe every couple should discuss before they walk down the aisle.

—What assets you'll share and what you'll keep separate

You say you've both accumulated some assets, so start there. Property-wise, what do you own? Where do you keep your money, and how is it invested?

Look at the whole picture — savings, investments, retirement accounts, real estate, cars, artwork, jewelry — and decide what you'll share and what you'll keep separate. Then ask yourselves questions like: Will you pool your money to buy a house? Do you want to keep individual control of a certain amount for some personal future goal?

One common approach is to consider all assets owned before the marriage as separate and assets acquired after as joint. Just remember that if you co-mingle any separate property (for example, if you combine your separate accounts into a joint account, and then make deposits and withdrawals), it becomes jointly owned.

To me, there's nothing wrong with a little financial independence in a marriage. In fact, I think it's important for every adult to have a degree of financial autonomy. But it's important to agree on what that means at the outset, so there are no hurt feelings later on.

—How you'll handle current and future debts

While you're not legally responsible for debts incurred by your spouse before the marriage, put all your debts on the table and decide how you're going to handle them. If one of you has a mountain of debt, the other could agree to help pay it down to lighten the load. It would be smart to agree on this in advance.

Debts incurred during your marriage are another story. State laws vary, but, in general, if you have joint credit cards, car loans or mortgages, you'll be jointly liable. If one of you is a spender and one a saver, confront this now and come to an understanding about how you'll handle debt.

—Who will be financially responsible for what

Some couples choose to stipulate upfront how they'll split up household expenses. For instance, those you'll share (commonly the mortgage, utilities, groceries, etc.) and those you'll keep separate (perhaps clothes, personal entertainment, etc.). You can also decide on a system for how this will work (for example, a joint account for shared expenses, individual accounts for personal things). Deciding this in advance can help keep small financial decisions from becoming large bones of contention.

If one of you makes considerably more money than the other, talk about what that means for your lifestyle. Most couples will want to have financial equality, but the details are up to the two of you. You might also discuss how financial responsibilities would change if one of you stays home to raise a family.

—What happens if the worst happens

Although no one wants to contemplate divorce, a prenuptial agreement gives you an opportunity to think clearly and rationally about what you'd want to do if you split up. An agreement should include decisions about division of property, spousal support and how you'd deal with conflict if a dispute arises — for instance, agreeing in advance to mediation.

Another consideration is an illness or disability. If one of you becomes disabled and unable to work, how will this impact your financial arrangement? Or if one of you faces major medical expenses, how will you pay for this as a couple?

There's more that can be in a prenup. If you decide to go ahead with a formal document, an attorney can help you determine what you and your fiance think is important to include. But to me, the main thing is to talk through these issues well before the wedding. Approach it in a loving way, listen to each other and form a trusting financial bond. That way, you can put your money concerns aside and look forward to a long and happy life together.

The information provided here is for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified ATTORNEY, tax advisor, CPA, financial planner or investment manager.

Carrie Schwab-Pomerantz, CERTIFIED FINANCIAL PLANNER(tm), is president of Charles Schwab Foundation and author of "It Pays to Talk." You can e-mail Carrie at [email protected]. This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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