Understanding Prenuptial Agreements:
What You Need to Know Before Saying “I Do”
A Prenuptial Agreement is not just a tool for the wealthy or the pessimistic. It is a proactive legal document that defines financial expectations for the marriage, protects individual assets, establishes how property will be divided in the event of divorce or death, minimizes conflict and reduces the cost and stress of litigation, and fosters open dialogue about money and long-term goals. The process of creating a Prenuptial Agreement can be more nuanced than people expect. Therefore, a well-crafted and effective Prenuptial Agreement results from thoughtful, informed, and transparent conversations well before the wedding day. Ultimately, a Prenuptial Agreement is less about planning for failure and more about creating clarity and security for both partners
There are five primary areas that every comprehensive Prenuptial Agreement should address:
- Defining Separate Property: The Prenuptial Agreement is an opportunity to define Separate Property outside of what the law typically protects. Sometimes Separate Property will be defined as individually titled property regardless of when it is acquired, appreciation on assets during the marriage, and/or income generated during the marriage. Clarifying what remains separate can prevent misunderstandings down the line especially when separate assets are commingled with marital funds (such as using inheritance money to buy a shared home).
- Defining Marital Property: Legally, Marital Property generally includes assets and debts acquired during the marriage, regardless of whose name is on the title. A Prenuptial Agreement can limit the definition of Marital Property to be only jointly-held property or to be acquired only with marital funds. A Prenuptial Agreement can also expand the definition of Marital Property to include inheritances, gifts, or assets acquired with Separate Property. There can be imposed timelines that alter the definition of Marital Property based on marriage duration, having children, or income discrepancy during the marriage.
- Distribution of Property in the Event of Divorce: Prenuptial agreements allow couples to outline exactly how property will be divided in the event of a divorce, which avoids the uncertainty of litigation and default state laws. This section may include how to divide real estate, investments, retirement accounts, and personal property. A big topic is how to divide a future marital residence and whether there should be a right to buyout or credits for Separate Property contributions.
- Distribution of Property in the Event of Death: A Prenuptial Agreement can complement estate planning by specifying what happens to property if one spouse passes away in an intact marriage. This is particularly important for blended families or when there are children from prior relationships, business interests, or significant inherited assets. Sometimes couples wish to follow the same path as asset distribution in the event of a divorce and other times couples wish to ensure that a surviving spouse maintains their inheritance rights. Sometimes, estate planning scenarios depend on the particular asset.
- Spousal Support / Alimony: Couples may choose to waive spousal support, limit spousal support to a certain income discrepancy or cap, agree on a formula in advance, or defer the issue to the law existing at the time of divorce. A comprehensive Prenuptial Agreement considers future earning potential, sacrifices made during the marriage, plans to have children, and other relevant factors.
Every couple is unique, and sometimes additional provisions are appropriate. These may include treatment of pets (courts increasingly view pets as more than property), handling of existing business interests, agreements regarding debt responsibility, protocols for dispute resolution (e.g., mediation vs. litigation), and expectations surrounding the allocation of marital expenses.
Creating a Prenuptial Agreement should not feel adversarial. At Berner Law and Mediation Group, our attorneys encourage a collaborative approach that focuses on transparency, respect, and shared values to create a foundation for open communication and mutual trust. If you are considering a Prenuptial Agreement, reach out to discuss how the process can be tailored to your specific needs and goals.
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