With one in three marriages ending in divorce, many are choosing to negotiate and sign prenuptial agreements. A prenuptial agreement is akin to a business contract between two parties; matters such as division (should death or divorce occur) of financial and personal assets, custody of children, and division of property are all addressed within the document. Those who consider a prenuptial agreement may own a business, have substantial assets including inheritance, have children from a previous relationship, and/or may have the potential to see income increase over the duration of the marriage (i.e., a doctor or entrepreneur).
A prenuptial agreement, where properly negotiated, can protect:
- Retirement or education funds that either party may have accumulated before marriage
- Division of property that either party owns at time of marriage
- Property interests of any children from previous relationships
- Obligations of spousal support should marriage dissolve
- Direction of education and religious instruction of children borne from marriage
- Finances of each party
- Against obligation to pay the other party's debts
- Inheritance
- Ownership rights in life insurance or disability policies
Prenuptial agreements can not be used to:
- Determine custodial arrangements of children
- Define matters of support of children
- Determine who has the right to marital home, or the right to sell same if marriage dissolves
- Define any personal matters, such as relationships with family
If you intend on entering into a prenuptial agreement, do so as early as possible prior to marriage—this insures that neither party is surprised by the nature of the agreement. Hopefully you and your spouse will live happily ever after.
