Prenuptial agreements were traditionally used to protect the assets of the wealthy in case their new marriage goes wrong and ends up in divorce. Also known as a ‘premarital agreement’, it has become a popular choice for modern couples across all tax brackets. A prenuptial agreement can work as a tool for both conflict avoidance and estate planning. The family law attorneys at ADAM help you understand the key aspects of a prenuptial or premarital agreement so you can decide if it is right for you.
What is a Prenuptial Agreement?
A prenuptial agreement is a contract written between an engaged couple before getting legally married. It is a tool to determine property ownership and includes a list of all properties and debts owned by each person. It also covers how property acquired during the marriage will be managed and divided in case of a divorce or death of one of the spouses.
It is important to mention that a prenuptial agreement can continue to be enforced in case of death, resulting in the surviving spouse being unable to receive their portion of the inheritance that they would be entitled to otherwise. A prenuptial agreement must be well-written and thought through in order to work properly in the future.
Why Would Couples That Aren’t Wealthy Choose to Sign a Prenup?
As mentioned before, a prenuptial agreement can be used both for conflict avoidance and for estate planning purposes. It can also protect one spouse from the other spouse’s debt. Here are some example situations where signing a prenuptial agreement may be a favorable choice:
- Couples with children from previous marriages: a prenuptial agreement can help define how property will be distributed to children from previous marriages in case a spouse wishes to pass on property separately to those children in case of death. Without it, a surviving spouse may be entitled to a large portion of the inheritance, reducing the percentage of property left for the children.
- Couples with one or both spouses accruing debt: A prenuptial agreement requires full financial disclosure of each party’s assets and debts, and can address how pre-marriage and marital debts and assets will be divided and managed. This is important for a spouse wishing to protect themselves from the other spouse’s questionable financial habits.
- Couples in which one spouse earns more than the other spouse: In this case, it may be important to address spousal support in your prenuptial agreement. You may want to add a clause that limits spousal support in the future in case of a divorce, as long as the clause is written fairly and considered non-retaliatory.
- Couples wishing to keep family property separate: If a spouse owns family assets that they wish to keep in the family rather than including those assets as marital property (in the case of a family heirloom or inheritance), they can choose to add a clause excluding said property from their marital assets and keeping it separate.
- Couples wishing to define what each spouse will be financially responsible for: A prenup can also be a great tool to help a couple get a clear picture of each side’s financial responsibilities during the marriage and define how the money will be managed. For example, the couple can agree to have a joint checking account and separate savings accounts, or they can agree on having one spouse be responsible for paying the mortgage while the other takes on responsibility for all utility bills, for example.
- Couples wishing to avoid conflict in case of divorce: Finally, one of the main purposes of a prenuptial agreement is to avoid future arguments over property division and alimony in case the marriage ends in divorce. The agreement can define in advance how property will be divided and how spousal support will be managed, making the process of getting a divorce less stressful.
What Happens If I Don’t Have a Prenuptial Agreement?
Without a prenuptial agreement, your marital assets will be subject to the laws of your state when it comes to determining property division after a divorce or after the death of a spouse. The state’s laws will determine what happens to property that you accrued during the marriage, and may also be able to determine how property owned before the marriage should be divided. This is important, because the laws of your state may go against your wishes for property division and management and cause undue stress in case your marriage ends or if one of the spouses passes away.
Prenuptial agreements are becoming increasingly popular among couples with or without high net worths, as it can not only help keep spouses on the same page regarding financial matters but also help guide decisions made about how assets should be divided if the marriage ends due to a divorce or due to the death of the other spouse. Without this document, all of these important decisions will be made by a court and guided by local and state laws.
If you decide that a prenuptial agreement is right for you, it is fundamental to ensure it is written fairly, clearly, and legally sound. You may draft your own agreement, or get the help of a family law attorney to ensure your agreement will be deemed valid in court. Your prenuptial agreement should then be reviewed by another attorney working on behalf of your future spouse and must be signed by both parties. The attorneys at ADAM can help guide you through the process of drafting and signing a prenuptial agreement and answer any of your questions.