Prenuptial Agreements (prenups) can protect you from your spouse’s debts, determine how your assets are passed on if you should divorce or pass away, and more. You can clarify what property each person brings to the marriage and how property, assets, and income acquired during the marriage will be owned. Without a prenup, your assets will be subject to the laws of divorce and/or probate court if you should divorce or pass away.
What is a Prenup?
A Prenuptial Agreement, also called a “prenup”, “premarital” or “antenuptial agreement”, is a legal contract made between spouses before the wedding to outline plans for the division of property and finances if the marriage were to end in a divorce or death down the road. Not just meant for the wealthy, Prenuptial Agreements aren’t only about protecting yourself in the unfortunate event of a legal separation or divorce, they can also help couples decide whether certain debts are personal or shared, and they can even help define plans for managing finances. Without a prenup to provide guidance, your assets will be subject to the laws of divorce and probate court, i.e., the state is left to divide property and finances after a death or divorce, meaning that you may not like the final decision. This makes the prenup a very important legal document for every couple to have regardless of financial status.
Use a Prenuptial Agreement if:
1. You are engaged to be married and wish to lay out the rights and obligations of each person regarding property and finances.
2. You own a business or property that you’d like to make plans for.
3. You hold a significant amount of debt.
4. You have previously been married or have children from a prior union.
How to Get a Prenup
Talking about money with a future spouse can be tough, however, being honest and candid before getting married can help avoid conflict. When writing a Prenuptial Agreement, it’s often best to do so with your partner. If necessary, you may also consider asking a third party, such as an attorney, mediator, counselor or religious advisor, to facilitate the conversation. Both parties must engage in full disclosure during the discussion and agree they are executing the document voluntarily. Prenuptial Agreements may be challenged as invalid and considered coerced if they are signed less than 30 days before the wedding, so be sure that you and your significant other have ample time to discuss your financial planning decisions before you tie the knot.
Here are some scenarios that you may want to review together:
Previous Marriage and Children
If you or your partner are obligated to pay spousal support or child support to a former spouse or partner, be sure to note that responsibility. Further, if either of you have an inheritance or other savings set aside for your child(ren)’s college tuition, you may also consider keeping that separate. Finally, if you wish to pass certain property down to your child(ren), you can outline that decision in your prenuptial plan, as well.
Income and Debts
Life doesn’t begin at marriage, so no doubt you will be starting your new life together with previously owned assets or existing financial obligations. What you will need to decide in your prenuptial contract is whether these will be shared, or if you’ll be keeping them separate. It’s up to you ~ perhaps you’d prefer to share your income in a joint bank account, but keep your credit card debt and student loans separate to protect your spouse from creditors. With a Prenuptial Agreement, you can define who is responsible for what debt, and also plan for splitting household bills and credit card charges.
Property and Inheritance
If you’ve already inherited or expect to inherit and you want to keep the inheritance separate, you can denote that in the premarital contract. If you own other property that you’d like to keep separate, it is important to note that in the Prenuptial Agreement, along with plans for distribution if you pass away or divorce. Obviously, no one sets out to be married and thinks of divorce. But in a Prenuptial Agreement, you can protect each party in the event the unwanted happens. While you should consider creating a last will and testament or updating your estate plan when you’re getting married, you can set certain conditions about assets and offspring in your Prenuptial Agreement. Again, it’s likely that you and your partner will be sharing almost everything, but there may be properties or assets you want to keep in your biological family or give to your kids from a previous marriage as opposed to your spouse upon your death. You can include those in provisions in your prenuptial contract.
Prenup Pros and Cons
If you are on the fence about whether or not you should get a prenup, here are a few advantages and potential drawbacks to consider:
Protects pre-marital assets including inheritances and business assets
Protects the rights of children from a previous marriage
Maintains separate property
Avoid future conflicts
Involves talking about money (a sensitive topic)
May feel pessimistic to prepare for divorce while planning a wedding
May require negotiation or involvement of attorneys
Prenup After Marriage
Contrary to popular opinion, it is possible to sign a marital contract after you tie the knot. Though not as common, a postnuptial agreement allows you and your spouse to outline your plans just as you would with a prenup. The only difference is that you are signing after your wedding date. Another myth about prenups is that you can’t change them after your wedding day. This is not true. If your financial situation has changed, you can alter or modify any terms as long as both parties agree and the updates are made in writing and signed. It is important to note, however, that unless the entire contract is revoked in writing, all other provisions will remain intact.
You may also want to consider updating your prenup if you move to another state where the laws might be different or if you become parents. If you have questions about any of the provisions in your prenup, don’t hesitate to ask a lawyer.