What is a Prenuptial Agreement?
A prenuptial agreement is a legal agreement between two fiancées who are engaged to be married. This agreement outlines certain property rights and financial arrangements that the parties agree to as a condition of getting married. The agreement allows the parties to avoid default rules about property in case of divorce or death.
What can a prenuptial agreement do?
A prenuptial agreement can protect the property interests of each individual in a marriage. Prenuptial agreements can also protect a spouse from assuming credit card, school, personal or mortgage debts of the other partner in the event of a divorce. For marriages in which either spouse has children from a previous relationship, prenups can even determine which property is protected for purposes of estate planning. Prenups can address spousal support and alimony concerns, and clarify the financial rights and responsibilities during a marriage, and they may help avoid long, emotionally exhausting and expensive disputes in the case of divorce.
Why would I need a prenuptial agreement?
Prenuptial agreements can help protect your assets in the case of divorce or death. You can designate that certain property will be considered your own separate property and not subject to any claims by your spouse. Prenups can protect family inheritance and your children’s interests in your efforts and assets. A prenuptial agreement can also provide clarity and a plan about how to distribute property if spouses divorce in the future. This way, there is as little contention or dissipation of financial assets and property as possible. As divorce rates in the United States continue to hover between 40 – 50%, prenups are becoming increasingly common for couples of all financial standing. In addition, engaged couples are more commonly obtaining prenuptial agreements as a way of deciding for themselves how their property and assets would be divided in the event of a divorce or death. Simply put, a prenuptial agreement provides clarity in a new marriage.
If you do not have a prenuptial agreement and you get divorced, state law determines how your property will be divided. There are a two different ways (generally speaking) that states divide property: Community Property states vs. Equitable Division states. In community property states, the property you earned or acquired during the marriage may be subject to a 50/50 split. Only nine states are considered community property states. In the remainder of states, that operate under “equitable division,” marital property may be subject to a fair distribution of the property between the parties, but not necessarily an equal split. How “separate property” and “marital property” are determined is often dependent on each individual situation, including length of marriage, and is often not as cut and dry as you may imagine. The courts have tremendous discretion when determining the division of property, and each state’s laws are different.
What are the requirements for a valid prenuptial agreement?
As is the case for most legislation, requirements for prenuptial agreements are based on an individual state’s law. Your prenuptial agreement must comply with the laws of your state. Some common trends among many states regarding prenuptial agreements include:
- Disclosures – The parties may have to provide complete and accurate disclosures about their respective income, assets, and debts.
- Written – Generally, a prenuptial agreement should be in writing and signed by both parties. It should be straightforward and easy to understand.
- Fairness – Courts may not enforce an agreement that is obviously one-sided and unfair. Courts may also consider whether the circumstances surrounding the prenuptial agreement were unfair, such as asking a bride/groom to sign it immediately before the wedding — ‘or else.’ Additionally, courts may examine the substantive information included in the prenuptial agreement for fairness.
- Legal representation – You are not required to be represented by an attorney. However, if you choose to hire an attorney, you and your fiancé cannot share the same lawyer. Even if you choose not to hire counsel, the court may still enforce the prenuptial agreement if you and your spouse had the opportunity to consult with a lawyer and simply chose not to.
- Free from Fraud and Duress – If a prenuptial agreement is the result of fraud or coercion/duress, it may be invalid.
What is a sunset clause?
A sunset clause is a provision in a contract or law that in essence gives the prenuptial agreement an expiration date. A sunset clause will list the specific date that the agreement will cease to have effect, and is typically drafted as an anniversary date like, “on the 25th anniversary.” The beauty of a sunset clause is that it allows all of the benefits of a prenup but can allows a couple to choose a date at which they believe the prenup is no longer necessary.
What cannot be included in a prenuptial agreement?
- Provisions that encourage divorce: All states have public policies that favor marriage and discourage divorce. Prenuptial agreements cannot encourage divorce in ways like giving a spouse an incentive to get divorced.
- Anything related to child support: A prenuptial agreement cannot waive child support or dictate how much support should be paid. The laws of your state will determine child support and/or the court can properly calculate the amount of child support that should be paid.
- Anything related to child custody: Likewise, prenuptial agreements may not contract away the rights of a child and dictate which parent will have primary custody. The prenuptial agreement cannot place any restrictions on child custody or visitation.
- Provisions that include illegal terms – Like all valid contracts, a prenuptial agreement cannot include any illegal terms or requirements. In other words, a spouse cannot be required to commit an illegal act in a prenuptial agreement.
What can be included in a prenup?
Classification of property: A prenuptial agreement can classify which property is “separate property” and what will be considered “marital property.” This classification allows a couple to avoid the state’s default laws that would otherwise apply in the event of divorce. For example, you or your partner may classify a condo or home you owned prior to marriage as “separate property,” meaning that should you divorce in the future, that properly would remain solely yours.
Debts: A prenuptial agreement may specify that each spouse is only responsible for his or her own debts.
Provisions for child run from a previous relationship: A prenuptial agreement may be able to protect the property interests of children from previous relationships in case the spouse passes away. The spouse may wish to leave separate property to their children from prior relationships. This may be especially important if there’s a desire to preserve a family heirloom that is cherished by the lineal descendants.
Maintenance of separate finances: A prenuptial agreement may specify that the spouses will keep certain finances separate during the marriage and may specify which funds are marital. This can allow spouses to keep control of their own bank accounts and avoid commingling funds that could otherwise result in changing separate funds to marital funds.
Why should I consider a prenup for a second marriage?
A prenuptial agreement can help you and your future spouse decide how you will support yourselves financially throughout your marriage, whether your assets will be considered separate property or marital property during the marriage, and what will happen if your marriage ever ends in divorce. A second marriage does face a greater risk factor for divorce than first marriages, with 67% resulting in divorce. so it’s important to take the necessary steps to plan for every scenario possible. If you’re remarrying, chances are that you have acquired more assets since your first marriage, making a prenup all the more relevant.
For example, a prenup can help you and your future spouse organize how household expenses will be shared. Will they be paid in proportion to your respective incomes? Will they be split equally down the middle? What about if one or both of you has children from another relationship? Will either of you support those children financially when they are in college and/or beyond? These are important conversations to have no matter what, and a prenuptial agreement can help facilitate these discussions and set the precedent for a marriage with plenty of open discussions.
What about if you or your future spouse is closing in on retirement? Well, you must consider estate planning. Do you want to leave their money to your children or provide financially for a new spouse? Both? To remedy any concerns of estate plans post-marriage, a prenup can specify that an estate plan must be put into place after the couple marries, or can specify what terms will occur upon death of one of the parties. A provision like this will allow both parties’ families to feel at ease.
Am I required to hire a lawyer?
You are not required to hire an attorney, but most states will look at whether or not you or your future spouse had the opportunity to obtain legal advice, and whether one or both of you were represented by an attorney. Was there enough time to find an attorney before the wedding and you chose not to? Did you just sign the agreement without even reading it the night before the wedding without an opportunity to consult a lawyer? The answers to questions like these will all be taken into consideration.
In addition, it is worth having an attorney review your prenuptial agreement with you in case you have questions. If your assets are complex (i.e. significant family inheritance, business(es), etc.), it may be an especially good idea to have a lawyer review your agreement. HelloPrenup allows you the option to easily bring your prenup draft to an attorney, who can make changes to your draft if necessary.
Is a prenuptial agreement made online enforceable?
Yes, a prenuptial agreement that you make online is enforceable. However, you need to verify the credentials of the website on which you’re creating a prenuptial agreement before assuming that the document will be valid. Due diligence is key!
HelloPrenup was developed by family law professionals in tandem with seasoned divorce attorneys. We currently only create prenuptial agreements for couples in the states of Pennsylvania, New Jersey, New York, and Massachusetts. If you and your fiancé plan to live in one of the aforementioned states, your HelloPrenup prenuptial agreement has the greatest chance of enforceability. Of course, nothing is bulletproof- even if you hire an attorney. Your goal should be to increase your chances of enforcement to the fullest extent possible.
If you have any questions regarding the enforceability of your prenup or if you want counsel to review and advise, feel free to take your prenuptial agreement to an attorney near you.
I just got engaged. Is it too soon to create a prenuptial agreement?
It’s never too soon after an engagement to create a prenuptial agreement. In fact, sometimes the sooner a prenup is created, the better. Some couples become stressed when drafting a prenuptial agreement; which is why we developed HelloPrenup to make the process simple and seamless. Nevertheless, we know that the concept of creating a prenuptial agreement can still seem intimidating — no matter how straightforward the process may be. Therefore, it may be best to get everything out in the open and create your prenup as soon as possible. Just like your teachers always told you, it’s best to avoid procrastination! After all, don’t you want to get to the fun stuff ASAP?
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Am I able to change my prenuptial agreement?
Should you and your fiancé want to change the terms of your prenuptial agreement, you are more than welcome to create a new document. Feelings, circumstances, and logistics change, and you are free to establish a new prenuptial agreement until you officially tie the knot.
If, after you walk down the aisle, you’d like to make changes to the terms set in your prenuptial agreement, you’d need to create a postnuptial agreement with an attorney.
Will a prenup increase my chance of divorce?
While, for some people, the term ‘prenuptial agreement’ has a negative connotation that implies divorce, that’s far from the case. If you and your partner decide to create a prenuptial agreement, that doesn’t mean that you two are more likely to get divorced.
In fact, research points to marriages actually being stronger when there is a prenuptial agreement in place. Since money is one of the biggest topics couples fight about, removing the financial smoke and mirrors simultaneously removes a huge stressor from relationships. Prenuptial agreements are all about transparency, and transparency contributes to strong marriages.