What Is a Prenuptial Agreement?
When you’re in the exciting process of planning a wedding and preparing for a life with your future spouse, the last thing you probably want to think about is the chance that your marriage will end. However, it’s an important event to consider. In the event of divorce, you should have a plan in place beforehand so you know what to do. Whether you are about to be married, in a marriage, or already in the divorce process, consulting a family law attorney that is practiced in the laws of your specific state is the best course.
Since divorce is a common way to end a marriage in the United States, couples engaged to be married should prepare themselves for that possibility. One of the best ways to protect your assets if your marriage dissolves is to sign a valid prenuptial agreement, or “prenup,” before the wedding.
Prenuptial agreements sometimes get a bad rap, but they are actually great legal tools that can serve as valuable peace of mind and avoid an ugly divorce. They come into effect only if the couple decides to divorce, but they do not adversely affect couples who choose to stay married.
Should you get a prenup? A typical misconception about prenups is that they’re only for very wealthy people or people with a significant difference in their financial worth before the wedding. In truth, anyone with independent property, finances, or children from a previous relationship should get a prenup. Prenups can also be important safety measures if you own a small business, whether you own it with or without your spouse.
A prenup, when done correctly, is a legally binding contract between you and your spouse. These contracts help set up your financial rights during divorce proceedings, including whether one party will pay alimony, how you’ll divide marital property and other assets, and can even affect your children’s future inheritances. They can also protect you from your spouse’s debts. For example, a standard provision of prenups is that each person will get to keep the assets they had before the marriage after the marriage ends.
Here are a few detailed examples of why drafting a prenup is beneficial:
- Property Division. In a prenuptial agreement, couples can decide to protect their property rights for themselves or other family members. Determining what is marital property versus what is separate property can be done for many reasons and in any number of ways. It is most commonly seen when there are children from a previous marriage whom the biological parent wants to provide for, or when there are substantial assets or important family heirlooms that a person wants to keep from a spouse in a divorce. An attorney can help you plan for how to handle real estate in a prenuptial agreement.
- It May Reduce Arguments and Save Attorney Fees at the Time of a Divorce. When a couple decides to divorce, each spouse is typically represented by an attorney who helps the couple negotiate the division of property. An enforceable prenuptial agreement can eliminate many of the billing hours of divorce attorneys since the couple has already decided how to divide their property and possessions. In some cases, the spouses may also determine spousal support or alimony in a prenuptial agreement. While some issues may remain, such as child custody and child support, deciding on many of the financial issues in a prenuptial agreement can lead to a faster and less expensive divorce than the couple otherwise would have obtained.
- Separating Debt Liability. A prenuptial agreement can describe how the couple will be responsible for debts incurred before the marriage. For example, suppose one spouse comes to the marriage with significant credit card debt. In that case, the prenuptial agreement could make that spouse responsible for the credit card debt that predated the marriage in the event of a divorce.
- Protection of a Family Business. A family business can be seen as a valuable asset during a divorce. In the absence of a premarital agreement, a court could award some of your ownership rights in a family business to your soon-to-be ex-spouse. That can lead to a potentially uncomfortable situation and a business that is not solely a “family” business any longer. A prenuptial agreement can protect your family business ownership and prevent a court from awarding any part of the ownership to your ex-spouse.
A prenuptial agreement allows a couple to determine how they want their property divided while still on good terms and without animosity. It is, therefore, important to consider a prenuptial agreement before getting married for all of the reasons described above.
While there are many things prenup can decide in advance, most issues involving your children are not included. Prenups exist to protect financial assets, which your children are not. You and your spouse can’t commit to valid custody agreements through a prenuptial agreement. Child custody is generally determined at the time of separation or divorce.
Even some financial matters regarding your children aren’t eligible for prenup inclusion. For example, agreements on future child support payments after a divorce will generally not be allowed or enforceable.
The first step to getting a prenuptial agreement is talking to your fiancé about your desire to get one. This can be a delicate conversation for some people, as no one wants to imagine their life without their partner someday. However, the effects of a prenup can protect and benefit both parties and should not be discounted without serious consideration.
The prenup will be a written document that you’ve both signed. State law differs on what is required to make the document valid and enforceable in court, so getting legal advice on a prenup is critical. The decisions and agreements you’ve made should be written out in clear, understandable, and factual terms. Vagueness or false information could nullify the prenup.
While it’s possible in some states to create a prenup yourself, it’s much more common and advisable to get professional assistance from a law firm familiar with marital agreements. In some jurisdictions, each partner must have separate attorneys when creating a prenup. That’s to ensure the agreement is as fair as possible for both of you. Finally, in addition to requiring both parties’ signatures, states such as New York and California have their own guidelines and regulations for validating a prenup.
A post-nuptial agreement is like a prenup but a postnuptial agreement is made after the couple is already married. Postnuptial agreements are less common but there may be good reasons for a couple to sign a postnup. A postnuptial agreement may allow the couple to make changes to an existing prenuptial agreement, while providing guidance on how certain assets will be handled in the event of a divorce.
Even the most minor mistakes in your contract could invalidate a prenup. Using an experienced local estate planning attorney or family law attorney could help you draft a more secure prenup to better protect you, your spouse, and your families.
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