Every marriage will terminate. Some terminate by death. Others terminate by divorce. A prenuptial agreement, often called a prenup, is a legal contract between two individuals created before they get married. Its main purpose is to establish how financial matters and assets will be handled during the marriage and at the termination of the marriage. Here are some reasons why people create prenups:
Protecting Assets: A prenup can safeguard one or both parties’ premarital assets, ensuring they remain separate in case of divorce. If one party owns a business it can prevent transfer of a portion of the business in the event of divorce.
Defining Spousal Support Obligations: A prenup can place limits on alimony.
Defining Financial Responsibilities: It helps outline how finances, debts, and property will be managed during the marriage.
Protecting Inheritance: It can secure certain assets for children from previous relationships or other family members.
Clarifying Debt Liability: A prenup can determine whether one spouse’s debts are shared or remain their sole responsibility.
There are limitations on prenuptial agreements. The parties are unable to include any provisions relating to child custody or child support. In addition, prenuptial agreements must be deemed to be fair at the time the contract was executed and fair at the time of enforcement. Since the time of enforcement can’t be known in advance, the prenup must anticipate enforcement early in the marriage and after a long term marriage. The agreement should consider termination by either divorce or death. The parties should discuss a prenup agreement as early as possible.
While some view prenups as unromantic, they can foster transparency and communication about financial expectations. An experienced family law attorney should be consulted if you are considering a prenup.
