What Is A Prenuptial Agreement, And Do You Need One?

A prenuptial agreement — commonly referred to as a “prenup” — is a legal, written contract created between two people prior to getting married. The agreement typically lists all property and important possessions each person owns (as well as debts) and lays out what each person’s property rights will be in the event the marriage ends.
 

Who Needs A Prenuptial Agreement?

While it’s common to hear about Hollywood movie stars, business leaders, and other wealthy individuals signing prenuptial agreements before they get married, prenups are not just for the rich.

Increasingly, couples of more modest means are electing to sign prenuptial agreements for a variety of reasons, including:

• Passing separate property to children from prior marriages: A couple with children from prior marriages may use a prenuptial agreement to specify what those children are entitled to, and what their new spouse is entitled to. This avoids potential legal challenges in the event of divorce.
• Clarifying financial rights: In some cases, couples with or without children, wealthy or not, may simply want to clarify their financial rights and responsibilities during marriage.
• Avoiding arguments in case of divorce: Divorces are often difficult and contentious for both spouses involved. A prenuptial agreement can help mitigate anger and acrimony by determining some of the legal specifics beforehand.

Prenups can also be used to protect spouses from each other’s debts, but creating an agreement specifically for this purpose is less common, and is usually included as part of a larger agreement that includes many other financial components.
 

If You Don’t Have A Prenuptial Agreement …

For couples that forego a prenuptial agreement, in the event of a divorce it will be the laws of the state in which the couple resides that will determine who owns property acquired during marriage.

State law will also determine what happens to that property in the event of divorce or death. In some cases, it is possible that state law will also have some determination of property acquired by each individual prior to the marriage.

Generally speaking, marriage is considered to be a contract between the participating spouses, and with that contract comes certain automatic property rights for each spouse. In the absence of a prenuptial agreement, each spouse usually has the right to:

• Share ownership of property acquired during marriage, with the expectation that the property will be divided between the spouses in the event of a divorce or at death.
• Incur debts during marriage that the other spouse may have to pay for.
• Share in the management and control of any marital or community property, sometimes including the right to sell it or give it away.

These laws are called marital property, divorce, and probate laws. If any of the above aren’t to your liking, then a prenuptial agreement is likely a wise choice.
 

Creating A Valid Prenuptial Agreement

As divorce and remarriage have become more common, and with more equality between men and women, courts and are increasingly more willing to uphold prenuptial agreements. Currently, every state permits them, although a prenup that is judged unfair or otherwise fails to meet state requirements will still be set aside.

To create a legally valid prenuptial agreement, it is in the interest of both individuals about to be married to meet with a family law attorney and discuss their options. While discussing what will happen in the event the marriage is unsuccessful may feel awkward, it’s an important step in making both parties feel secure and comfortable long term.