What are Prenuptial Agreements?
Prenuptial agreements are a common legal step taken before marriage. A prenup establishes the property and financial rights of each spouse in the event of divorce. Prenups are often used to protect the assets of wealthy spouses but also can protect family businesses and serve other important functions. One of the core aspects of a valid prenuptial agreement is full disclosure of income, assets, and liabilities by both partners. The result of full disclosure is that the
couple has no financial secrets. Each party knows what the other has and what he or she expects.
After full disclosure is made, the couple can proactively address potential future issues such as these:
• How children from a prior marriage will be treated if the couple later separates or divorces or if one spouse dies
• Whether any business interests will remain the separate property of one spouse or will be considered marital property
• Whether pre-existing assets and debts will be treated as separate or marital in nature
• Whether spousal support will be paid should the couple later separate or divorce and, if so, in what amount
Determining how to handle issues like these in advance of marriage can help set expectations for both parties and alleviate the cost of future disagreements.
By discussing tough issues like these early on, a couple can set the tone for open communication during their marriage. For additional help deciding whether prenuptial agreements are best in your situation, contact a licensed, experienced
lawyer in your state.
What prenups can generally address:
• The specific state’s law that the agreement will be subject to
• Who will be responsible for premarital debts
• Whether particular items are considered community or separate property
• Financial responsibilities during the marriage
• Who owns the marital residence
• How property will be divided/distributed at divorce
• How property will be distributed in event of death
• Spousal support/alimony obligations (this varies by state)
• How disputes related to the agreement will be resolved
• A sunset clause (this refers to the validity of the agreement being based upon being married for a certain number of years)
Prenups generally can’t address:
• Custody and visitation of minor children
• Child support
• Anything that is illegal or would be considered unconscionable
• Anything that is deemed to encourage or trigger the divorce
Now, let’s take a look some of the pros and cons of entering into valid prenuptial agreements.
• A premarital agreement can protect the inheritance rights of children and grandchildren from a previous marriage.
• If you have your own business or professional practice, a premarital agreement can protect that interest so that the business or practice is not divided and subject to the control or involvement of your former spouse upon divorce.
• If one spouse has significantly more debt than the other, a premarital agreement can protect the debt-free spouse from having to assume the obligations of the other.
• If you plan to give up a lucrative career after the marriage, a premarital agreement can ensure that you will be compensated for that sacrifice if the marriage does not last.
• A premarital agreement can address more than the financial aspects of marriage, and can cover any of the details of decision-making and responsibility sharing to which the parties agree in advance.
• A premarital agreement can limit the amount of spousal support that one spouse will have to pay the other upon divorce.
• A premarital agreement can protect the financial interests of older persons, persons who are entering into second or subsequent marriages, and persons with substantial wealth.
• The agreement may require you to give up your right to inherit from your spouse’s estate when he or she dies. Under the law, you are entitled to a portion of the estate even if your spouse does not include such a provision in his or her will.
• If you contribute to the continuing success and growth of your spouse’s business or professional practice by entertaining clients or taking care of the home, you may not be entitled to claim a share of the increase in value if you agree otherwise in a premarital agreement. Under the laws of many states, this increase in value would be considered divisible marital
• Starting a relationship with a contract that sets forth the particulars of what will happen upon death or divorce can engender a sense of lack of trust.
• It can be difficult to project into the future about how potential issues should be handled, and what may seem like an inconsequential compromise in the romantic premarital period may seem more monumental and burdensome later on.
• A low- or non-wage-earning spouse may not be able to sustain the lifestyle to which he or she has become accustomed during the marriage if the agreement substantially limits the amount of spousal support to which that spouse is entitled.
• In the “honeymoon” stage of a relationship, one spouse may agree to terms that are not in his or her best interests because he or she is “too in love” to be concerned about the financial aspects and can’t imagine the union coming to an untimely end.
Are Prenuptial Agreements Right for You?
If you and/or your future partner are considering a prenup, you may each need the assistance of an experienced family law attorney. In fact, it’s crucial that each partner consult a different attorney (from different firms) to ensure the rights and
interests of each are covered. Remember, courts have the ability to review and make decisions related to prenuptial agreements. Thus, it is important to seek out an experienced family lawyer when considering a prenup.