Prenuptial agreement – an overview

A prenuptial agreement, also known as antenuptial agreement, is a contract entered into by two individuals (a man and a woman) before their marriage or civil union. Popularly abbreviated as prenup, the agreement mainly describes the future rights to each other’s property in the event of a divorce or death. The contents of the prenuptial contract can differ widely, but commonly features provisions for dividing the property, should the partners divorce and any rights to spousal support during or after the dissolution of marriage.

There are mainly two types of prenuptial agreements

  • Marriage contract for those people who are married or about to be married
  • Cohabitation agreements for those people who are not married

Each state has its own laws assigning certain types of assets obtained during marriage as community property. Even if such acquired assets are in the name of just one partner, when anyone of the partner dies, the community property will be divided between them, sometimes by court or by the agreement.

How will you decide whether you need a prenup or not? Let us explain who should have a prenuptial agreement?

You can think of taking a prenuptial agreement if you come under any of the categories given below:

  • You enjoy assets such as a house, vacation rental, retirement funds or stock.
  • You have offspring and/or grandchildren from a previous marriage
  • You or your partner is richer than the other
  • You own any business or is a partner of a business
  • You may be obtaining an inheritance
  • One of you is much wealthier than the other
  • You have elderly parents for whom you should take care of

If you haven’t taken a prenuptial agreement, the state law will designate how your property has to be divided if you ever divorce. These laws can sometime dictate a result which both of you doesn’t wants to. So you can avoid such a situation through a prenuptial agreement. You can state how your property division has to be done in the agreement. This helps to avoid any possible disagreements at the time of a divorce. In most states, you can also provide agreements about whether one partner or both of you will be permitted to alimony. But some states do not allow writing such agreements. So check whether your state allows making such agreements.

Before you decide to take a prenuptial agreement, you need to be well aware of the positives and negatives of the contract. That is you must check what this contract can and can’t do for you. For example, a prenuptial agreement will mention who gets what in case of divorce, but it cannot tell to future child custody rights. Therefore it must be noted that your prenuptial agreement must describe only what it should. If there are any illegal or unconscionable clauses in the agreement, then during a dispute a judge would take your entire prenuptial agreement without much seriousness. So take much care while taking a prenuptial agreement.