What is a Prenuptial Agreement and How Does it Work?
Prenuptial agreements are not just for the wealthy, they safeguard assets and provide financial stability in the event of a divorce.
Today, more couples are signing prenuptial agreements than ever before. This type of agreement can ensure your premarital assets remain in your name and prevent you from losing financial stability if you later divorce. The rising popularity of prenuptial agreements may be because many young people are waiting longer to get married and have more assets and debts when they officially tie the knot.
Some also attribute it to be the product of a society where divorce is no longer stigmatized as it was in the past. Many people getting married today grew up as children of divorce, and some have already been through it themselves.
Understanding What a Prenuptial Agreement Does
A prenuptial agreement, sometimes called a prenup, is a contract signed by soon-to-be spouses before they get married. The content of this agreement usually centers on financial matters but can include many other details as well. They outline what will happen in the event of a divorce.
While almost anyone can benefit from a prenup, they can be especially useful for those who:
- Own their own business
- Hold patents or copyrights
- Have children from previous relationships
- Have significant outstanding debts
- Have high assets
Every prenup is different, and your attorney can help you design one that meets your state’s laws and your specific needs.
Prenuptial agreements commonly contain provisions related to one or more of the following:
- Premarital assets
- Assets acquired by only one party during the marriage
- Division of jointly acquired property and assets
- Premarital debts
- Debts one or both parties acquired during the marriage
- Assets set aside for children from a previous relationship
- Tax filing status
Prenuptial Agreements Can Offer Protection for Anyone
People most commonly get prenups to protect assets and investments, often because one party enters into the marriage with much greater wealth than the other. This is why we most often hear about them in relation to the Hollywood elite, socialites, high-dollar investors or other wealthy families. However, they offer the same type of protection to your everyday Jane and Joe.
Consider these reasons you might need a prenup even if you have few assets:
- They Help You Avoid a Messy Divorce
If you witnessed your parents or a friend take a divorce case to trial, you likely saw their personal finances overanalyzed and their most embarrassing moments discussed in front of all their family and friends. By agreeing on how you will divide property in a divorce before you are at each other’s throats, you can avoid a lot of this mess.
- Prenuptial Agreements Can Address Debt
Many people today enter marriage with sizable debts. Student debt, car payments, credit cards and loans can be a significant burden to carry and can even cause trouble in paradise if your partner is resentful about having to pay your debts. A prenup can ensure that each partner gets their own premarital debt after a divorce, or that one spouse will cover their own debt acquired during the marriage.
- Ensure Your Children Receive the Assets You Put Aside for Them
If you have children from a previous marriage or relationship, you should have a prenup in place to ensure your children — not your spouse — ends up with the assets you saved for them in the event of a divorce. These assets could include savings accounts, college funds or almost anything else you hope to leave to your children eventually.
- Keep Family Heirlooms in the Family
Family heirlooms typically do not have a lot of monetary value, but there are exceptions to this rule. If you have a family heirloom that has sentimental, as well as monetary value, you may want to include a provision in your prenup to ensure you get it in the divorce so that it remains in your family.
- Ensure You Get Your Inheritance
If you expect to inherit real estate, money or other valuables after a loved one passes away, you may want to include provisions in your prenup that ensure you walk away with these assets after a divorce.
LegalShield Can Help You Write a Prenup Before You Get Married
When becoming a LegalShield Member, within twenty-four hours, you will have access to an attorney who can answer your questions, draw up your agreement and walk you through the legal process of creating a prenuptial agreement.
State laws differ significantly when it comes to creating this type of agreement, therefore we will put you in touch with a local attorney who can execute your prenup according to local rules.
This is not intended to be legal advice. States laws can vary. Please contact your provider law firm for any legal advice or assistance.