One question that domestic relations attorneys are frequently asked is, “Do I need a prenuptial agreement?” This is especially common for young professionals or couples entering their second marriages. While prenups have historically been used in situations where a wealthier spouse wants to protect his or her assets, there are several ways in which a prenup can benefit young professionals regardless of how much they have in assets or income. And although everyone’s situation is unique, the reality is that most couples can benefit from these contracts.
What Is A Prenup?
A prenup is a contract between two people before their marriage that defines certain rights and obligations in the event they divorce or one of them dies. Because of the complexities surrounding the enforcement of prenups and the ever-changing law impacting how they may be interpreted by a divorce court, it is strongly recommended that you use a family law attorney to draft the document instead of relying on standard templates found online.
Here’s why: In most states, there are certain requirements that must be adhered to for the agreement to even be enforceable. One such requirement is that both spouses must have had the opportunity to obtain independent counsel to review the terms of the prenup. Another requirement is that the parties must each fully disclose their financial circumstances, including income from all sources, and a detailed listing of all assets and liabilities. Each state has its own standards for the enforcement of prenups, so it is important to talk with your lawyer about your state’s requirements.
What Does It Address?
A prenup often addresses two major financial issues that arise in most divorce cases—alimony and property division.
Alimony. Alimony is periodic payments from one spouse to another for support after a divorce. There are many reasons a spouse might receive alimony, for instance if he or she is delaying or stopping a career to care for children. Property division is how a court disposes of property acquired during a marriage, such as financial accounts, real estate, automobiles and furniture.
Property. There are two types of property in a divorce case, separate items and marital items. Broadly speaking, separate property is that which a party brings into a marriage or acquires during a marriage from inheritance or a third-party gift. Sometimes, it can be converted into marital property by certain actions, such as when a home is retitled during a marriage into joint names. The court (or jury) has broad discretion in equitable division states to divide the marital property in a fair and equitable manner, which does not necessarily mean an equal division.
Most people believe that in the event of a divorce, their assets will be divided “equally.” This is not always the case, which is why prenups can help couples avoid expensive arguments in the unfortunate event of a divorce.
The beauty of a prenup is that parties can agree at the outset of a marriage how to address these thorny issues that can cost tens of thousands of dollars to litigate in the event of a divorce.
For example, the parties can agree to a complete waiver of any alimony whatsoever in the event of a divorce. Or they could agree to lump sum alimony payments with increasing amounts based on the length of the marriage. Alternatively, they might not discuss alimony at all but decide to take other cost-saving measures—attending mediation, for example, or agreeing to privately arbitrate the issue.