What is Prenup Agreement?
A prenuptial agreement, commonly known as a prenup, is a written agreement that a couple signs before getting married. The contract sets forth the couple’s financial plan for their marriage in the unfortunate event that the marriage breaks down or one person dies. Prenuptial agreements might seem unromantic. However, they are arguably the best way of ensuring that should the marriage end, there will be little or no conflict over money and property. A common misconception is that prenups are simply a strategy for rich people to safeguard their assets, especially when they marry someone less wealthy. However, this is not the sole purpose of a prenuptial agreement. Actually, a prenuptial agreement is a good way to start your marriage in the spirit of honesty and openness. A prenup agreement is particularly beneficial if it is drawn in such a manner that both spouses would be able to move on with their lives with ample financial security even after divorce.
It is certainly true that in the past, wealthy people were more likely to seek prenuptial agreements than people who don’t have significant assets. However, this isn’t the case any longer. A prenup would also be necessary for people in many other circumstances. For example, you could seek a prenup if you run a business and you would like to ensure that its future is protected. Perhaps you have children from another relationship and would like to safeguard some assets for them. If you own a house and you are getting married, a prenuptial agreement is a must-have. There are many reasons why you and your spouse would want to have a prenuptial agreement. If you are unsure whether this is the best approach for you, feel free to talk to a prenuptial agreement lawyer. A lawyer will help you to understand the pros and cons of a prenup.
What Should Be Included in a Prenup?
Disputes and misunderstandings over finances are one of the leading causes of failed relationships. A prenup is a practical and respectful way of addressing your new family’s financial future. The agreement ensures that you and your spouse are on the same page and you both will be protected in the unlikely event of divorce. Below are some of the important things that you should include in a prenuptial agreement:
- Premarital Assets and Debts — a prenup must outline the property and debts that each spouse had before marriage and how they will be treated when the couple gets married. For example, if one party owned a home before marriage, would this home be jointly owned by both spouses after marriage or will one spouse exclude it from being shared at separation? If one spouse had debt before marriage, will he/she be solely responsible for the debt, or will both spouses have to repay the debt? A prenup should answer these important questions.
- Children from Previous Relationships — a prenup agreement should also address children from previous relationships. The agreement may outline how these children will be financially cared for and the inheritance arrangements. In normal circumstances, the remaining spouse usually has the first claim on inheritance when one spouse dies. However, if you have children from another relationship, you will want to make certain specifications in the prenup to guarantee their inheritance.
- Marital Assets and Debts — normally, the law treats any marital properties and debts accumulated during marriage as jointly-owned by both spouses. If you want to separate certain assets and debts from the joint ownership, you have to specify this is the prenuptial agreement.
- Family Property — one spouse could have some family property like an inheritance that they would like to retain even after divorce. The spouse can outline this in the prenup to ensure that in case of divorce, they end up with the property, and in case of death, the property is passed down to their children.
- Division of Property in Divorce — a prenup should outline how your property and debts will be divided in case of divorce. This is particularly crucial if a spouse owns a business and they want to ensure that they retain control over the business after a divorce.
- Spousal Support — a prenup could also address the issue of spousal support. If spousal support is to be paid, how much should be paid and for how long? Spousal support releases are more difficult to include in prenup agreements as they will be closely scrutinized by the Court if ever challenged.
What Should Not be Included in a Prenup?
There are many misconceptions regarding what can and cannot be legally included in a prenuptial agreement. Below are five elements that you cannot include in a prenuptial agreement in Cambridge:
- Non-financial Rules — the role of a prenuptial agreement is to outline rules and instructions regarding certain financial-related issues. You cannot use a prenup agreement to establish ground rules in your marriage on things like how to raise children, how you will approach religion, and who will perform certain tasks.
- Issues Involving Child Support and Custody — you cannot include issues involving child support and child custody in your prenuptial agreement. For example, you cannot state that one spouse will not be obligated to pay child support or that a spouse will be granted sole custody of the children after divorce.
- Anything Illegal — you should not include anything illegal in the prenuptial agreement. The agreement should not invalidate or override statutes.
- An Incentive for Divorce — you should not include any provision or terms that are deemed to be an incentive for divorce.
- Unreasonable or Unfair Terms — if the judge establishes that the terms of the prenup are inherently unreasonable or unfair towards one spouse, he or she may invalidate the agreement.
- Cheating Clauses – Clauses that punish one spouse or the other spouse if they are caught cheating will not be enforced by a judge.
Do I Need a Lawyer for a Prenup?
The law doesn’t require you to have a lawyer to write a prenup. However, when you draft a prenup on your own, the chances that the judge will approve the prenup are low. Hiring a lawyer increases the likelihood of having the prenup approved by the judge if it is later challenged.
The judge will only approve the prenup if it complies with the law. A lawyer understands all aspects of drafting a prenup, including what should be included and what should not.
Investing in a lawyer will cost you money. However, the cost is worth it because you will have the assurance that your assets will be well protected should your marriage end in divorce. It really is a good return on your investment. If the cost of the prenup is $4500 and you are able to protect over $200,000 in assets, it just makes good financial sense.
Frequently Asked Questions
- What is a Prenup?
A prenup is a contract entered into by couples before or in anticipation of marriage. Prenups are also commonly known as prenuptial agreements or, after the wedding, an antenuptial agreement. A prenup agreement sets out the rules that the couple operates with should they end the marriage. It outlines the terms of the couple’s assets and debts and what should happen in the event of divorce. A prenup doesn’t establish terms of issues relating to parenting time or decision making.
- Should I Consider a Prenup?
Yes, you should consider a prenup if you are planning to get married. Signing a prenup might seem like a romance killer in your relationship but that is really taking an old fashion view of these agreements. Having a financial plan with your partner where you discuss your goals and your financial future is a very loving act. Unfortunately, many marriages do not have the fairy-tale ending that many couples anticipate in the beginning. A prenup serves as a road map that helps couples identify the path of least resistance and handle their financial issues amicably in case of divorce. More and more couples realize the importance of a prenup.
- Can Same-Sex Couples Sign a Prenup?
Yes. The focus of a prenup is on the assets owned by the couple both before marriage and those accumulated together in marriage. A prenup also addresses other areas like spousal support, inheritance property, and property acquired before marriage.
- Will a Prenuptial Agreement Kill the Romance in our Marriage?
Many people planning to get married may dismiss the idea of a prenup for the fear that it will kill the spark or romance in their relationship. However, a prenup is crucial because it helps motivate the couple to have a candid discussion about their finances and their future goals and the what-ifs of life, including what happens if their marriage fails.
Having this discussion provides an opportunity for the couple to understand each other better before even saying “I Do.” People are usually willing to enter into a contract with the people they love. Therefore, the willingness of a couple to discuss a prenuptial agreement is a sign that the couple trust one another and is comfortable discussing a sensitive financial topic.
A prenup might seem like a romance killer. However, there is nothing romantic about lengthy divorce proceedings just because you could not agree on the division of property during divorce.
- Does a prenup Mean that I Can't Get Spousal Support?
No, whether the prenup allows a certain amount of spousal support or none at all is up to you and your partner. You and your partner can decide on:
- A varying or fixed amount of support
- The payment period
- Whether support is necessary
- The amendment of the prenup to provide support if one spouse is out of work
- No alimony at all
- Who Should Get a Prenup?
Anyone who plans to get married or live with a partner should get a prenup. They don’t just protect the ultra wealthy anymore. If you have income or assets, you need to consider this. A big misconception is that a prenup will result in one person being protected in terms of their assets and the other person being left destitute. That is not the case. Agreements actually provide security so you know exactly what happens if you break up. The agreement also has to be fair. An agreement that is completely one sided would never stand up to scrutiny by a judge and will be easily overturned.
- Are there Specific Requirements that Make a Prenup Valid?
Yes. A prenup must meet certain requirements in law that most DIY agreements miss and missing some of these requirements could make the entire contract invalid. If you intend to enter into a prenuptial agreement, it is important to discuss it with a lawyer who understands prenuptial agreements. The lawyer will help you draft the prenup or review the drafted prenup to ensure that it complies with all the requirements.
A prenup must include information revolving around the division of assets and debts. It should not include information on child support or custody. A prenup should not outline the chores or duties of every spouse in running the home, and neither should it outline the punishment for a cheating spouse.
A prenup agreement must be reasonable and fair to both spouses. If the judge feels that a prenup is unfair in any way, he/she will not uphold it.
- What is the Difference between a Prenup and a Postnup?
Couples enter a prenup agreement before marriage, but a postnup agreement comes after marriage. In addition to the difference in timing, prenup and postnup agreements have differences in the requirements for making the contracts enforceable. If you fail to meet the requirements for a prenup or a postnup agreement, the whole contract could be rendered unenforceable.
- When Should I Start the Prenup Process?
The sooner you start the prenup process, the better. Typically, you should start the process 6-12 months before your wedding so that you can draft the contract without pressure. Ideally, couples should sign a prenup four months before the wedding. Earlier time frames may be accommodated in certain circumstances, so don’t worry if you are outside this time frame. It is still a good idea to contact a lawyer.
The process of signing a prenup will vary on a case-to-case basis. Negotiations between partners often vary. For example, some partners will negotiate directly with each other, while others want to involve a lawyer at every stage.
- What Level of Disclosure Should You Provide when Signing a Prenup Agreement?
You should give material disclosure regarding your financial circumstances. Your soon-to-be spouse should also do the same. If you are not sure about the level of disclosure, our lawyers at M&Co Law will guide you accordingly on the extent of disclosure that is necessary.
- Is a Prenuptial Agreement Enforceable?
A common misconception is that prenuptial agreements are not enforceable. Many people believe that prenuptial agreements are not enforceable because of the misinformation they have read and some rare court cases. A properly drafted agreement that meets all the requirements is enforceable. That’s why you should hire a lawyer to ensure that the prenup is drafted in accordance with the applicable law.
A prenuptial agreement can be invalid, and some of its portions can be unenforceable if it doesn’t meet the requirements for making the agreement. The agreement can also be unenforceable if it is evident that either of the parties entered the agreement while under duress or coercion. The judge could invalidate the prenuptial agreement if it is unfair or unreasonable.
You should have your lawyer review any prenup to ensure that your rights are protected and that the contract is enforceable.
If you require any advice or information from our prenup lawyers, please contact a member of our team today.
The decision to enter into a prenuptial agreement is very personal and requires buy in for both parties in a relationship.
Reasons a Prenuptial Agreement Might be Invalid
Prenups have to be properly drafted in order to be valid to avoid the stress and expense of fighting over money in a break up.
Prenuptial Agreement Benefits and Drawbacks
There are many benefits to signing a prenuptial agreement, especially if you and your partner have significant assets.
Can Your Prenuptial Agreement Be Modified after Your Marriage?
A prenumptial agreement may be modified after you’re married depending on the local law and the specific terms of your agreement.