- What is it? – The basics. A prenuptial agreement, or an agreement entered into before marriage, is a private agreement or contract between an engaged couple signs before they get married that details the division of their assets and debts in the event of divorce or death. The agreement usually sets forth a division of those assets and debts in a different outcome than might normally occur under the law without such an agreement. For example, the state law might provide for an equal division of the assets and debts in the absence of any agreement of the parties, but in a prenuptial agreement, the parties might agree and decide that they want an unequal division of assets and debts for any number of reasons, including the existence of children from a prior relationship or because one spouse brings more assets or more debts to the marriage. Each state has its own laws regarding the enforcement and validity of prenuptial agreements. Which state’s law to apply depends on where the marriage took place, where the parties live during the marriage and what law the agreement says should apply.
- Fairness matters and circumstances dictate fairness. In most states, the agreement needs to be fair, the parties typically must fully disclose their assets and debts, and the parties each need their own attorney. What is fair? Fairness depends on the unique facts and circumstances of that couple.
- Don’t hide the ball – make a full disclosure. Typically, the parties must fully disclose their assets and that disclosure needs to be set forth in the agreement. Failure to disclose assets or debts may make the agreement unenforceable.
- Get your own attorney. Each person should have their own lawyer to represent them regarding the prenuptial agreement. Some states require it. Not all attorneys are created equal in expertise or experience. Search for the one that suits your needs and that will represent your interests.
- Plan ahead. Presenting your intended with a proposed prenuptial agreement the day before the marriage is not good a very good idea, and in some states could be used to overturn the prenup. For that reason, the idea of a prenup should be raised long – months – before the wedding date. Because negotiation over the terms of the agreement can suck some of the fun and romance out of the wedding planning and pre-wedding events, it is usually best to get the agreement resolved well before the stresses of the wedding are upon you and your fiancé.
- What’s yours is yours and what’s mine is mine. Prenuptial agreements often provide that any assets (and debts) brought into the marriage by one party remain that person’s separate or nonmarital property. A prenup could also state that any assets the couple acquired during the marriage are marital property subject to equal division. Many clients find this approach fair and reasonable; however, each prenuptial agreement is custom-tailored to the couple’s unique needs.
- Alimony or not? In most instances, the agreement will either waive alimony or spousal support. Sometimes the agreement limits or creates a formula for calculating any spousal support. Sometimes the agreement does not even address the topic. If spousal support is waived, it means that neither party can seek or request spousal support from the other in the event of divorce. If the topic is not addressed in the agreement, then either party could seek support from the other.
- Till death do us part. Most agreements will allow each party to leave their separate property to whomever they want while providing some provision or bequest for the surviving spouse.
- Leave the children out. A prenuptial agreement generally cannot provide for or limit child support or parental rights related to children. Most state laws do not let a couple contract away the rights of their children.
- It’s not too late, is it? Sometimes, even after the marriage, it is not too late to get the benefits of a prenuptial agreement. Depending on state law, a married couple may be able to enter into a postnuptial agreement, which is signed after the marriage. The basic components of a postnuptial are the same as a prenuptial agreement listed above, although postnuptial agreements may be harder to enforce depending on the state and the circumstances, and some states require additional consideration. Consideration is something of value that one party gives to the other to induce that party to sign the agreement. That could be forgoing a claim or a right, cash, real estate, stock, or other assets, relief of debt or liability, or other items of real value. Postnuptial agreements typically cannot promote or encourage the divorce of the parties.
With any marriage, whether planned or already in existence, sometimes a dose of “hope for the best, but plan for the worst” is best. That can include suggesting that the happy couple enter into a prenuptial or postnuptial agreement.
(Adapted from an article by Christine Fletcher, Esq.)