A prenuptial agreement (prenup) is a private agreement between a couple signed prior to marriage that lays out the division of assets and liabilities in the event of divorce. It is a common misconception that prenups are only beneficial for the very wealthy or for those who are entering a marriage with uncertainties. In reality, prenups can serve as a useful financial and communication tool that can strengthen a relationship prior to marriage. Additionally, prenups supersede many states’ default marital laws, meaning that you and your partner can make decisions you believe are in both of your best interests that may be decided differently under state law. Although it seems like it is expensive to draft and execute documents that may never be used, doing so often saves the parties tens of thousands of dollars in future legal fees.
Topics to Discuss
Creating a prenup gives couples the opportunity to discuss financial needs, wants, and expectations. Prenups are customizable to a couple’s specific circumstances and there are numerous topics that can be considered including but not limited to the following.
- Debts and assets coming into the marriage
- It is beneficial to establish the financial standings of both individuals before deciding whether to join finances.
- Debt liability
- If someone is entering a marriage with financial debt, couples can decide whether those premarital debts remain as the separate responsibility of the individual who incurred them.
- Saving and spending strategies
- This is a wide-ranging category that encompasses things like investments, retirement planning, and the management of joint and/or separate bank accounts.
- Handling inherited assets and gifts
- A prenup can ensure that inherited family property remains with the birth family and does not go to the spouse in the event of divorce.
- Children with previous partners
- A prenup can help ensure that an individual is able to leave their separate property to children from previous marriages.
- Estate planning
- A prenup can be used to reinforce estate planning documents such as wills and trusts, which makes it more possible to carry estate plans out in a way that aligns with the couple’s desires.
Approaching these topics may be difficult or awkward as there is stigma surrounding Prenuptial’s. However, by addressing them, couples can be better equipped to handle challenges that may arise in marriage. A prenup is effective at preventing a costly divorce, more importantly it can help you lay the foundation for a healthy, long-lasting marriage.
Citations
Jennifer Riemer, What is a Prenuptial Agreement?, American Bar Association (May 1, 2023), https://www.americanbar.org/groups/family_law/publications/family-advocate/2023/spring/what-is-prenuptial-agreement/
Tim Shaffer, Attorney
Victoria Kelly, Legal Intern
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