Can Prenuptial Agreements Help You?
There's a lot of popular myth about what a prenuptial agreement ("prenup") is and who uses them. While wealthy individuals do often use prenups, prenuptial agreements have far more uses than simply protecting the assets of a wealthy individual. Prenups can be used to:
- Protect the one party's assets
- Protect a party from assuming the debts of the other party
- Determine how property will be passed upon death
- Clarify financial rights and responsibilities during a marriage
- Avoid long, costly, disputes in case of divorce
If You Don't Get a Prenup
Absent a prenup, your state has a series of laws that determine how property is handled during marriage and after marriage. In most states for instance, your spouse is entitled to:
- Share and receive ownership of property acquired during the marriage
- Receive some of your property upon death
- Share in any debts acquired during the marriage
- Share responsibilities in managing property acquired during the marriage.
There a many good reasons to deviate from your state's laws. For instance, if you have children from a previous marriage, upon your death you may want your property to pass to your children rather than transfer to your current spouse. The advantage of prenuptial agreements is that you can craft them to meet your particular needs.
Creating a Valid Prenup
Originally, prenuptial agreements were heavily scrutinized by judges because they were traditionally used to protect a wealthy individual from a partner with substantially less financial means. The fear was that the poorer spouse was being coerced to sign and that such agreements encouraged the dissolution of marriages.
Today, however, every state allows prenuptial agreements, and divorce and remarriage are more widely accepted. In addition, women are considered to have a more equal place in society and requiring less protection from the court. As a result, most prenups will be upheld as valid.Courts do, however, still analyze prenups with a careful eye so it pays to do it right. Create a prenup that is clear, understandable and justifiable. If a judge decides that your prenup is unfair or doesn't meet state requirements, the agreement will be set aside. Although it is perfectly fine to negotiate and create a basic prenup yourself, both parties should get the prenup reviewed by their own attorney who can advise them on their rights and review the prenup to ensure it complies with state law.