A prenuptial agreement is a contract entered upon marriage. The contract includes details about division of property, spousal support and other asset dispersing in the event of divorce or death. The goal of a prenuptial agreement is to outline solutions regarding division of assets in the event of divorce prior to any marital problems. Oftentimes prenuptial agreements are entered into by couples who have children from prior relationships to protect their children’s inheritance rights should they die. If any assets were already in possession before marriage, these will be clearly outlined in a prenuptial, as will any assets acquired after matrimony. Both parties must willingly agree to the prenuptial agreement and fully disclose their assets in order for it to be valid.
Who should have a prenuptial agreement?
People choose to sign a prenuptial for a variety of reasons, especially if one spouse is wealthier than the other. If you earn more money than your partner you may wish to protect your finances in the event of a divorce. Those who are remarrying may see value in having a prenuptial agreement, especially if there are children from a previous marriage. This is in order to carefully outline support obligations and the distribution of significant assets in the event of divorce or death.
If you or your spouse has an increasing amount of debt, this is another reason to draft a prenuptial, to ensure you are not responsible for paying the debt if the marriage should ever end. In some cases, if there is no prenuptial agreement when a spouse claims bankruptcy, creditors can go after the estranged spouse. Business owners may desire a prenuptial so the other spouse does not automatically own part of their business after divorce. An ex-spouse can also overturn the terms of an estate plan if there is no prenuptial agreement.
A postnuptial agreement differs from a prenuptial because it is drafted after a couple is married. As with a prenuptial, this document outlines details of property division and allocation of assets in the event of divorce or death. Both parties must willingly agree to the terms of the postnuptial in order for it to be considered valid.
If money is the source of tension in your marriage, a postnuptial agreement may serve as a form of marital mediation. A mutually accepted plan for allocation of finances and tangible property can ease tensions in a marriage. If your finances are not clearly defined in your marriage – for instance if one spouse has recently acquired a business, or one of you has chosen to leave work to return home – these changes can create financial and emotional unrest. However, a postnuptial agreement, decided on by both parties, can help clarify the state of your finances even if you do not plan to become divorced. In other words, a postnuptial agreement can create a sense of financial security within a marriage.
Creating a prenuptial or postnuptial agreement doesn’t have to create tension within your relationship. In many cases, this type of documentation can alleviate financial uncertainty and create a greater sense of trust. Speak with a qualified prenuptial lawyer to decide if drafting a pre- or post-marital agreement will work for your relationship.