As the word itself suggests, a prenuptial agreement is a legal step that some people choose to take before the marriage. It is also referred to as a premarital agreement or simply a prenup. Not all the couples always live happily ever after. So, this contract establishes the property and financial rights of the spouses in case they decide to get a divorce.
“Divorce: a resumption of diplomatic relations and rectification of boundaries.”
In fact, developing diplomatic relations with your partner right at the beginning of your relationship is a good idea. Thinking about a prenup is one step toward that, for it can help avoid a lot of headaches during a divorce. It’s not romantic to think about a divorce when you are just about to start your married life. So, you can have at least a prenuptial agreement in place. Usually, people opt for a prenup in the following cases:
- One or both of the partners have been married before
- They have children
- One partner has significantly more wealth
- One of them has got a huge debt
- Any of the partners owns a business
- Any of them owns a real estate
- One of the partners will most probably not work
Tip* While you might think that a prenuptial agreement is right for you, your partner may not want to sign one. It is vital that both parties feel comfortable with such a contract and sign it voluntarily.
When to start?
Better to start planning your prenuptial agreement some 4-6 months prior to marriage. This will provide enough time for you and your future spouse to determine what to include in the agreement. Having the final draft a month before your wedding will let each of you consult an attorney separately. It’s good to have plenty of time to think things over before signing a life-changing contract. Especially in some states, a prenup can be considered invalid if the judge believes that you have signed it under stress or duress.
What to include?
Let’s imagine you have already discussed the possibility of having a prenuptial agreement with your partner. What’s next? Next, consider the things that you can include in it. See it below:
- Children: From a previous marriage or relationship
- Property: Real estate, vehicles, heirlooms
- Assets: Retirement accounts, stock shares, trusts, current income
- Debts: Mortgages, student loans
- Businesses: Your own business, or a family business which is shared among several people
Tip* You need to make this list to see who is going to get what after a divorce. Usually, if you divorce, you and your spouse will not be able to own each other’s separate premarital assets. Also, with a prenup, you can override default state laws and decide which types of property and assets will be shared between you two and which ones should be separate.
Questions to discuss when drafting a prenuptial agreement
Management of assets, income, loans, and debt is not easy. When considering a prenup, you should also answer the following questions:
- Once you’ve created your list, how will you handle premarital assets and debts in case of a divorce?
- Will the assets and debts remain separate property?
- What if your premarital property is used to pay off your spouse’s premarital debts or vice versa?
- Will the person paying the other’s debts need to be reimbursed, or is it a gift?
- Would the income and assets you accumulate during your marriage be 50/50?
- Will you or your spouse be the person to manage your joint finances, or you will do it together?
- Would you have joint or separate bank accounts?
- How are you going to manage your retirement savings?
- What about spousal support?
- Are you both intending to work and contribute to the household?
- Can there be a circumstance that makes one partner incapable of working?
- Would the family gift be shared or belong to the person whose family purchased it?
- Will you file joint taxed or separate ones?
- Will any of you go back to school?
- How are you going to repay the student loans?
- Would the prenup ever expire or be renegotiated?
- What will happen if one of you becomes disabled?
What NOT to include
Prenuptial agreements cover financial and property matters. So, there are several things that they do not cover. Here is a list of things that cannot be included in a prenup:
- Regardless of what you and your partner have agreed upon, if it seems unfair to the judge, your agreement will not be valid.
- Your prenup cannot include arrangements for child custody, visitation, school preferences etc.
- Alimony rights differ from state to state. When people are getting a divorce, the court might allow several modifications to state alimony guidelines. However, you cannot avoid alimony in any case.
- A prenup should be in place to only help regulate your financial arrangements, not your relationship preferences. It cannot include information on who is going to take care of your children or pets or do household duties.
- Lifestyles clauses which are usually about infrequent sex, weight gain, and similar problems should be omitted from a prenup.
- Anything that violates federal and/or state laws cannot be part of a prenuptial agreement.
Drafting your prenup
You have got two choices here. Either you can write the draft yourself and have an attorney review it professionally. Or you can hire an attorney to draft your prenuptial agreement for you. The second option can be especially handy if you or your spouse has got a lot of assets or complex finances. Before hiring an attorney, discuss your financial preferences with your spouse and make sure you know what should happen if you decide to go through a divorce.
Signing the document
Before you sign it, you need to find a notary to witness your signature and notarize the agreement. In some states, you may need at least two witnesses to have your prenup notarized. Your prenup will take effect once you receive your marriage license. Like with any other document, make sure have copies of your prenuptial agreement and keep them in a safe place. Good luck!