Jump to Section
Need help with a Prenuptial Agreement?
What Is a Prenuptial Agreement?
A prenuptial agreement, also known as a premarital agreement or prenup, is a legal contract entered into by two parties before they get married that outlines each individual's assets and specifies how financial issues will be handled in case a divorce occurs. Prenuptial agreements are often associated with individuals who are wealthy, but this type of contract can benefit any couple who intends to get married. Alternatively, a postnuptial agreement is a similar document signed after two people are married and can be an option when people experience significant change in wealth after their marriage. However, a postnuptial agreement is sometimes seen as less enforceable, always speak with an attorney who can exaplin your rights and options prior to making a decision.
A prenuptial agreement allows the couple to address potential divorce issues early in the relationship when both parties are more likely to deal fairly and generously with one another. This document clarifies which assets belonged to each party before the two merged their homes while also specifying what assets each individual will be entitled to at the dissolution of the marriage and after the couple has combined some of their resources.
The Popularity of Prenuptial Agreements
In recent years, prenuptial agreements have increased in popularity. In a 2018 survey by the American Academy of Matrimonial Lawyers, 62% of lawyers polled said they had seen an increase in the number of clients seeking prenuptial agreements during the last three years. Some of this increase may be due to couples waiting longer to get married and accumulating more wealth and assets before getting engaged. The prevalence of divorce in previous generations may also contribute to the increase in prenups, since many millennials now getting married have divorced parents.
Benefits of a Prenuptial Agreement
Couples have many reasons to consider a prenuptial agreement.
Protection for Children From Previous Marriages
If either individual has a child or children from a previous marriage, a prenuptial agreement can include essential provisions that will help protect the children in the marriage. A prenup ensures that a child's biological parent can leave a portion of the estate to the child in the event of the parent's death. If the prenup is not in place, the surviving spouse may inherit most or all of these assets, leaving less than what the parent might have desired for the child.
Comprehensive Planning for the Future
Prenups cover more than divorce alone. Although divorce is the most common reason a couple will use a prenup, this document can also specify what happens in the case of death or incapacity.
Protection From Debts
If either party is entering the marriage with debts, a prenuptial agreement can clarify who these outstanding debts belong to. This arrangement will protect the other party from taking on the debt in the event of the divorce, an important point if the debts are substantial.
Safeguards for Personal Property
A prenuptial agreement can specify what property belongs to each party. If one of the individuals owns a home, vehicle, or other significant assets, a premarital agreement can prevent the other spouse from attempting to claim these pieces of property in a divorce settlement. Those who are engaged are more likely to deal fairly with one another, which could help the couple avoid disputes later if the marriage ends.
Protection From Typical Divorce Settlements
Understand what a typical divorce settlement would look like so that you can fully appreciate the value of a prenuptial agreement. Lacking a prenup, each spouse will typically have shared ownership and management of property acquired during the marriage. The spouses will also share liability for debts incurred in the marriage, leaving both parties to pay for these liabilities.
How to Handle a Prenuptial Agreement
Be aware of the requirements for a prenuptial agreement so that you can make sure that this document holds up in court if you need to call upon it in the future. While you can draft your own prenuptial agreement, you should do so with care and make note of the following considerations.
You should discuss your prenuptial agreement as soon as possible after you get engaged. Aim to complete this contract at least six months before the wedding. If you wait until a significant part of the wedding planning is complete, you may have trouble proving that the prenup wasn't entered into under duress. Once the parties have invested in sending invitations, putting a deposit on a wedding venue, and purchasing wedding attire, proving that the prenup was entered into freely becomes more challenging.
Secure Separate Attorneys
A single attorney cannot represent both parties fairly. Working with separate attorneys ensures that each party has someone reviewing the contract who is interested solely in the individual's best interests. An attorney is also a valuable resource for navigating issues that are specific to your state. Every state handles prenups differently. You should consult with a local attorney who understands the process in your area. You may want to:
- Create the first draft of the prenuptial agreement together.
- Individually take the document to separate lawyers for review.
- Meet together with both lawyers to review the changes and finalize the document.
Know What Areas to Include
You can put many items into a prenuptial agreement. While you're taking the time and effort to create this document, consider including as many details as possible. Some items that you can include in a prenup are the following:
- Distribution of retirement benefits
- Specifications on how you will file tax returns
- Details on the management of finances in your marriage including joint bank accounts, household bills, and expenses
- Information on savings contributions
- Arrangements for large purchases such as a home
- Specifications for managing a joint business
- Details on financial management if a spouse goes back to school
- Information on how disputes will be handled where arbitration or mediation is involved
- Management of credit card payments and spending
- Distribution of property and life insurance in the event of one spouse's death
Image via Flickr by maniniyotako
The Limitations of a Prenuptial Agreement
A prenuptial agreement is not all-encompassing. You can't manage all aspects of a marriage with this type of contract. You should understand these limitations before drafting the prenup, particularly if you're creating this contract independently. A prenup that includes the following may be deemed invalid:
- Child support : Child support is the right of a child , not the parent. Courts will not validate a prenup that attempts to waive a child's right to support, even if both parties are in agreement on the issue.
- Child custody or visitation : The courts maintain the right to determine how child custody and visitation are handled based on the interests of the child. The parents may not specify how these issues will be handled in a prenup.
- Incentives for divorce : Anything that might encourage a divorce will likely invalidate a prenuptial agreement.
- A waiver of alimony : Many states prohibit alimony waivers, and others limit them. While a few states allow alimony waivers, these waivers must be handled carefully.
- Personal matters : A prenuptial agreement is designed to deal with the couple's financial matters. It cannot be used to specify how the couple will raise their children, manage the housework, divide the holidays, handle surnames, or allocate their time, among other considerations.
A prenuptial agreement is a valuable document that deserves a great deal of time and consideration. When drafted properly, this contract can provide you and your spouse with a great deal of protection as you both approach the future together.
Meet some of our Prenuptial Agreement Lawyers
I am a NY licensed attorney experienced in business contracts, agreements, waivers and more, corporate law, and trademark registration. My office is a sole member Law firm therefore, I Take pride in giving every client my direct attention and focus. I focus on getting the job done fast while maintaining high standards.
A twenty-five year attorney and certified mediator native to the Birmingham, Alabama area.
Longtime corporate real estate counsel with specialities in commercial leasing, contracts, corporate governance, and general small business/startup/entrepreneurship legal issues.
I absolutely love helping my clients buy their first home, sell their starters, upgrade to their next big adventure, or transition to their next phase of life. The confidence my clients have going into a transaction and through the whole process is one of the most rewarding aspects of practicing this type of law. My very first class in law school was property law, and let me tell you, this was like nothing I’d ever experienced. I remember vividly cracking open that big red book and staring at the pages not having the faintest idea what I was actually reading. Despite those initial scary moments, I grew to love property law. My obsession with real estate law was solidified when I was working in Virginia at a law firm outside DC. I ran the settlement (escrow) department and learned the ins and outs of transactions and the unique needs of the parties. My husband and I bought our first home in Virginia in 2012 and despite being an attorney, there was so much we didn’t know, especially when it came to our HOA and our mortgage. Our real estate agent was a wonderful resource for finding our home and negotiating some of the key terms, but there was something missing in the process. I’ve spent the last 10 years helping those who were in the same situation we were in better understand the process.
Samantha has focused her career on developing and implementing customized compliance programs for SEC, CFTC, and FINRA regulated organizations. She has worked with over 100 investment advisers, alternative asset managers (private equity funds, hedge funds, real estate funds, venture capital funds, etc.), and broker-dealers, with assets under management ranging from several hundred million to several billion dollars. Samantha has held roles such as Chief Compliance Officer and Interim Chief Compliance Officer for SEC-registered investment advisory firms, “Of Counsel” for law firms, and has worked for various securities compliance consulting firms. Samantha founded Coast to Coast Compliance to make a meaningful impact on clients’ businesses overall, by enhancing or otherwise creating an exceptional and customized compliance program and cultivating a strong culture of compliance. Coast to Coast Compliance provides proactive, comprehensive, and independent compliance solutions, focusing primarily on project-based deliverables and various ongoing compliance pain points for investment advisers, broker-dealers, and other financial services firms.
Experienced General Counsel/Chief Legal Officer
Attorney Gaudet has worked in the healthcare and property management business sectors for many years. As an attorney, contract drafting, review, and negotiation has always been an area of great focus and interest. Attorney Gaudet currently works in Massachusetts real estate law, business and corporate law, and bankruptcy law.