Updated: Oct 23, 2020
What Is A Prenuptial Agreement
A prenuptial agreement between individuals has become a commonly used instrument within estate planning. In general, a prenuptial agreement is an agreement entered into by two individuals before marriage that outlines each parties’ rights during the marriage, after a possible dissolution of a marriage, and upon the death of one or both of the individuals.
Who Should Consider A Prenuptial Agreement
There are many factors that can determine whether or not a prenuptial agreement would be beneficial prior to a marriage. Some common considerations include: 1) whether or not one or both spouses intend on bringing property into a marriage; 2) whether there is a significant financial disparity between spouses; 3) whether or not one or both spouses are remarrying; 4) whether or not one or both spouses have children outside of their anticipated marriage. These are non-exclusive considerations, however, if any of these circumstances do apply, understanding the impact of not having an agreement may help to determine if one would be necessary. Since each family and their considerations are different, having an experience attorney walk through specific hypothetical situations may prove beneficial to both individuals.
Common Issues Covered In A Prenuptial Agreement
A prenuptial agreement can cover an array of issues depending on the marriage. Most agreements will include provisions concerning the following matters:
- Each spouse’s rights and obligations regarding both real and personal property, which can include the right to use, sell, manage, transfer, or dispose of the property in question;
- How property is to be allocated in the event of a death or divorce, including life insurance policies or business interests;
- How any income produced by one or both spouses will be treated in the marriage and what specific expenses are to be paid by a certain spouse, or both, regarding specific assets;
- Whether or not either spouse will be entitled to alimony in the event of a divorce and the specific terms of such alimony;
- Whether or not either spouse would be required to create a testamentary instrument, such as a Trust or a Last Will and Testament, to ensure the terms of the agreement are adhered to in the event of a death. Since surviving spouses have certain rights, without a prenuptial agreement, if there is no agreement or testamentary instrument, a surviving spouse may receive more than anticipated from an estate while a child from a previous marriage may receive less.
Requirements For Creating A Valid Prenuptial Agreement
The Uniform Premarital Agreement Act sets forth specific requirements that must be satisfied in order to create an enforceable agreement:
- The agreement must be in writing;
- The parties must execute the agreement in contemplation of marriage. An agreement will only be enforceable if both individuals shared the specific intent of an imminent and definitive marriage;
- There must be a full disclosure of the assets and liabilities of both individuals. A failure to disclose assets or liabilities may void certain parts of the agreement or render the entire agreement unenforceable;
- The agreement must be signed by both parties voluntarily.
The “Big” Picture
The main objective in estate planning is to create a plan that secures both the person and property of an individual. A plan must not only provide solutions to an individual’s immediate concerns, but also provide protections from unforeseeable variables in life that may arise in the future. Second marriages and marriages where individuals are coming into the marriage with property are becoming more and more prevalent. It has never been more important to make sure that you take the necessary steps to incorporate any necessary documents, such as a prenuptial agreement, into your estate plan.