A prenup (also known as a prenuptial or premarital agreement) allows married couples to outline the financial aspects of their lives. And while there are some clear distinctions betweenwhat a prenup can and can’t do, this type of contract can generally afford protection that the parties might not get otherwise in a court of law.
There are several benefits to having a prenup. Couples can stipulate how property is distributed in the event of a divorce, superseding the normal community propertylaws of their state.
A prenup can outline certain responsibilities and/or agreements between the parties such as paying a spouse’s way through college or paying off individual debts. Prenups also allow couples to decide now about future financial matters and identify any heirlooms or other issues that might come up later during a distribution of your estate. Read more aboutwhat a prenup can and can’t do.
All the benefits aside, prenups are not right for everyone. Many soon-to-be spouses shy away from a prenup because they see it as a sign of distrust. In addition, if your prenup is found to be grossly unfair or biased, the court may set it aside and invoke standard community property laws anyway. Laws regarding prenups also vary from state to state, so you may find that what you want to stipulate isn’t allowable by law.
Also, most people don’t realize that prenups are not always air tight, and can be challenged in court. Read more about criteria for valid prenups.
Look at your individual situation. Prenups are generally designed to address financial and property matters. Do you have certain assets you want to protect in the event of a divorce? Do you own property or maintain a large savings that you’d like to keep separate from your marriage? Do you have kids from a previous marriage or own part or all of a business? Do you have plans to leave portions of your estate to someone other than your soon-to-be-spouse?
If you answer yes to any of these questions, you might find a prenup to be a useful tool. But the most important factor to consider is whether you and your spouse will be comfortable with such a contract. Many couples view prenups as a wedge between them and have difficulty overcoming the emotional ramifications of the document. When deciding whether or not you need a prenup, be sure to consider all the possible outcomes.
Most pre-marital agreements govern the terms of the divorce, which enable the parties to end their marriage more quickly and without the need for court intervention. However, pre-marital agreements do not always result in a faster or less expensive divorce. Prenuptial agreements can be challenged, so there can even be litigation surrounding the validity of the prenup itself…resulting in what could even be a longer, more expensive divorce process.
For those with significant assets to protect a prenuptial agreeement stil may be a good idea. Even though prenups are sometimes challenged during a divorce, a well-drafted one can, in some scenarios, be worth the time and expense. Read more about criteria for valid prenups.
If you decide to look further into entering into a prenuptial agreement and your situation is pretty simple in terms of assets, you may want to consider looking at state-specific prenuptial forms
What happens if I set up the prenup in CA where I am living now and later move to NY to reside permanently after the marriage?