Updated: Mar 19, 2019
A Premarital Agreement (also called a Prenup) is a written contract created between two people before they are married. It typically lists each person’s assets and debts and specifies what each person’s property rights will be after marriage.
Couples create Premarital Agreements for a number of reasons. Some couples who have children from prior relationships may want a Premarital Agreement to ensure that their children receive a certain amount of property. Other couples may simply want to clarify their financial rights and responsibilities during marriage. Premarital Agreements can prevent potential arguments about how property will be divided in the event of a divorce. Also, they can protect spouses from each other’s debts.
Premarital Agreements can help, not only in the event of divorce, but also in the event of a spouse’s death. The Agreement stipulates who receives what property when a spouse dies. This overrides statutory rights of surviving spouses. It can even take priority over a person’s Will, if the Agreement was fairly negotiated between the spouses. This allows individuals to develop their own estate plans free from the fear that their wishes might be overridden after death.
If a couple does not have a Premarital Agreement, how is their property divided? State law determines who receives what property at divorce or death. This division of property applies to assets acquired during marriage and can apply to property acquired before marriage, such as inheritance accounts.
If a couple does not want the state to decide who receives what property, then they should create a Premarital Agreement. At divorce or at death, the Court will carefully examine the Premarital Agreement. If it finds that the Agreement is unfair or fails to meet state requirements, then it will not be considered. It is important, then, to make sure that couples create a legally valid and understandable Premarital Agreement.
Do you think you need a Premarital Agreement? Schedule an appointment today and one of our attorneys will be happy to help you.