You may wonder if you need to sign a prenuptial contract (or "prenup") if you are planning on getting married. You should know what a prenuptial agreement is, what can be done with it, the reasons that couples sign them, and how to make a valid one.
What is a Prenuptial Agreement?
A prenuptial contract is a written agreement that two people create before getting married. A prenuptial agreement lists the debts and property that each party owes, as well as the rights of each spouse during marriage.
The prenuptial agreement is known by different names in each state, such as:
- Premarital Agreement
- Antenuptial agreement
- prenuptial contract.
The agreements that spouses enter into after their marriage are called postnuptials, postmaritals, or maritals.
Who Needs Prenuptial Agreement?
Contrary to popular belief, prenups do not only benefit the wealthy. Premarital agreements can be used to protect the assets of a wealthy spouse, but couples with modest incomes are also increasingly using them. Prenuptial agreements are used for many different reasons.
- Give separate property to children of prior marriages. Couples with children of prior marriages can use a prenup agreement to specify what happens to their property after they die. This allows them to pass separate property on to their children while still providing for one another, if needed. A prenuptial agreement can prevent a surviving spouse from claiming a significant portion of their spouse's assets, which would leave less for their children.
- Clarify your financial rights. Couples, whether they have children or not, and regardless of their wealth, may want to clarify the financial rights and responsibilities that will be involved in their marriage. They may, for example, spell out their plans to manage joint accounts, credit cards and household bills. They may also want to specify their obligations when they plan to send the other spouse to college or to a professional degree program.
- Prevent arguments in the event of divorce. While no one wants to consider divorce as a possibility, many couples are aware that it is a real possibility. They may want to avoid arguments during a divorce by deciding in advance on how they will split their property and whether either spouse will get alimony. It's important to note that some states will not allow a spouse give up their right to alimony. In most states, judges are more likely to look at the waiver of alimony closely and not enforce it if a spouse doesn't have an attorney.
- Protect yourself from debts. Couples can use prenups to protect themselves against each other's debts.
Find out what prenups are and what they can accomplish .
If You Do Not Make A Prenup
You can't have a prenuptial contract if you want to avoid the state laws that determine which spouse owns what during marriage and how separate property and marital assets are divided in divorce.
According to the law, marriage can be considered a contract made between the couple. This contract gives each spouse certain automatic rights. According to state laws, the spouse may have the right:
- Share ownership of the majority of property acquired during marriage with the expectation that property will be split between the spouses in the event of divorce
- Share responsibility for debts accrued by either spouse during marriage
- Share in the management and the control of marital assets (or community properties in states with community property laws), which may include the right to sell the property or give it away.
Prenuptial agreements are a good option if you don't like the laws in your state regarding marital property or community property. A prenuptial agreement will, in most cases allow you to decide how you want to deal with your assets.
How to Make a Valid Prenup
Prenuptial agreements are becoming more common and the law is changing to be more tolerant of them. Prenuptial agreements were scrutinized by judges with suspicion in the past because they involved almost always a waiver of financial and legal benefits from a spouse who was less wealthy.
In recent years, divorce and remarriage are more common, and there is more equality between men and women. Courts and legislatures have been more willing to accept premarital agreements. Today, all states allow them. Judges will, however, still invalidate agreements that are unfair and/or do not meet state requirements for prenuptial agreement.
Prenuptial agreement attorneys, so it is important to negotiate and draft your agreement in an understandable and legal manner. You and your spouse can both have lawyers review your agreement and give you at least a brief advice if you've drafted it yourself. Some states even require independent legal review. Even if this is not a state requirement, judges will be more inclined to question a prenuptial agreement if neither spouse received independent legal counsel prior to signing the agreement.