Getting married is a big milestone. While no one preparing for a wedding wants to entertain the possibility that you’ll eventually get divorced, the chance that you’ll split is significant. Although the idea of sitting down with your fiancé(e) to talk about what should happen if you ever part ways may seem about as romantic as a vacation at a sewage-treatment plant, talking about and making a prenuptial agreement may be one of the best ways to protect yourself if things go south.
It’s becoming increasingly common for couples from all walks of life to have a prenuptial agreement in place when they get married. While these legal contracts are mostly used to address issues that arise during a divorce, they can also be useful for inheritance and estate planning purposes, as well as for other personal and family issues that might arise during marriage.
As with most other legal issues, prenuptial agreements are governed by state law, and each state’s laws can differ significantly. Only an experienced attorney can give you advice about what you should and shouldn’t include in your prenup, and what your specific needs might require. But before you talk to a lawyer or bring the topic up to your fiancé(e), there are some general principles you should be familiar with before you make or agree to a prenup.
Who Needs a Prenup?
A prenuptial agreement, also known as a premarital agreement, addresses several key issues you will face if you get divorced, as well as issues you may be confronted with during the course of your marriage. Regardless of your personal situation, using a prenup is usually a good idea for both partners, regardless of their backgrounds. However, there are some situations in which prenups are particularly useful.
1. People With Significant Wealth
In any marriage where one spouse is significantly wealthier than the other, or where one spouse earns a lot more than the other, a prenuptial agreement is a necessary tool for asset protection purposes. Alimony and property divisions after a divorce are key components of any prenup. If you don’t use one, the wealthier spouse may end up paying much more than anticipated. Using a prenup allows both partners to agree to reasonable property division and alimony terms while they are both on good terms, rather than having to come to an agreement after the relationship has decayed.
2. Blended Families
When you get married, you and your spouse automatically earn inheritance rights from the other. Should either of you die, the surviving spouse is entitled to at least a portion of the property the deceased spouse leaves behind. So, if one spouse has children from a previous relationship, the inheritances those children receive could be affected by the new marriage. When you create a prenuptial agreement, you and your partner can choose to limit or give up your right to a spousal inheritance, thus preserving any inheritance for your children.
3. Business Owners
If you or your spouse own a business, even a microbusiness such as an Etsy store, you will want a prenuptial agreement to protect your ability to continue to own and operate the business if you get divorced. This is especially important if you have a business that involves shareholders, partners, or other ownership interests, as creating a prenup may be required of you by your partner’s or the business’ terms. Should you fail to draft an appropriate prenuptial agreement, your spouse may end up with an ownership interest in the company, even if they didn’t have a hand in starting, managing, or growing it.
4. People With Significant Debt
Once you’re married, you and your spouse combine many of your financial interests. The downside of this is that combining your finances allows creditors to seize your property if a debt goes unpaid, even if the debt is your spouse’s and not yours. For example, if your spouse takes out a credit card and fails to pay it off, their creditors might take money out of your joint bank account to satisfy the debt.
However, with a prenuptial agreement, you can specify whose property will be used to pay for premarital debts, determine how debts acquired during the marriage are split, and detail who is responsible for paying marital debts. Without those provisions, you might be forced to pay for debts your spouse acquired without your approval, participation, or consent.
For couples planning on having children, or blended families considering having more children, the question of who will stay home to care for those children is something you both need to talk about and address in your prenup. Staying home to raise children can negatively affect your career opportunities and your ability to earn an income. It’s also a factor that courts will consider when answering alimony questions.
Prenuptial agreements are contracts. As contracts, they have to meet specific legal requirements before a court will enforce their terms. When you create a prenup, you and your partner have to ensure that the agreement meets any state legal standards. If it doesn’t, a court may not enforce it and can impose its own terms on the issues you’d previously agreed to. Though every state has its own legal requirements when it comes to prenups, there are some common standards:
- Prenups Must Be Written. Usually, prenuptial agreements must be made in writing. The document must include any terms you want to address, and both parties have to sign it.
- Prenups Must Be Voluntary. You cannot force or coerce someone into signing a prenuptial agreement. There’s no single way to determine whether a prenup was entered into voluntarily; however, any sign of duress or coercion can be enough to invalidate the contract. For example, let’s say your wedding is a week away and your partner says they needs you to sign a prenup this week or you’ll have to postpone. In that situation, the stress of the impending wedding, the possibility that you might have to postpone, and the limited time you have to consider the prenup terms can lead a court to conclude that your signing wasn’t voluntary.
- Prenups Must Be Accurate. When you make a prenup, you and your partner have to be honest about what you own, what you owe, and all of your relevant financial and personal details. You cannot, for example, hide your credit card debts or lie about what kind of property you own. While you may not have to disclose every aspect of your past or personal life, you must provide enough information for your partner to be able to make a reasoned decision about the terms of the agreement.
- Prenups Must Be Fair. All prenuptial agreements have to be fair to both you and your partner, but determining what’s fair is not always easy. Courts use different standards to determine fairness, but in general, you’ll have to pay particular attention to how you address property distribution and alimony terms. You may, for example, have to create an alimony clause that adjusts alimony payments from you to your spouse the longer the marriage lasts, especially if your spouse will be considered a dependent and not earn an income.
- Prenups Should Involve Legal Counsel. While not a necessary condition, having your own attorney advise you throughout the process of creating a prenup goes a long way in proving that the document is legally valid. While you might be able to use the same lawyer, it’s generally best for both partners to consult with their own attorney prior to creating or signing a prenup.
There are several key issues you will have to address if your marriage ends in divorce, such as property distribution, marital debts, homeownership, alimony, and child custody. If you cannot come to an agreement yourselves, the court will decide these issues for you. However, if you have a prenup, you can effectively agree to divorce terms before you get married and, hopefully, before your relationship becomes so contentious that it makes having an amicable divorce impossible. The following list contains the terms you can include in your prenup.
1. Property Settlement
When you get divorced, one of the most important issues you’ll have to face is how to divide the property you and your spouse own. Whether you owned the property before you got married, acquired it during your marriage, or inherited it, you’ll want to make sure your prenup addresses how you’ll split it up after your divorce. You can choose almost any system you like, such as choosing to keep the property you acquired before the marriage and equally dividing the property you and your spouse acquired after.
However, you must be sure that your agreement covers any property issues that might apply to you now or in the future. For example, while you may not own a home at the time of writing your prenup, you’ll still want to include terms about how you’ll divide real estate and how that real estate will be titled. Other issues, such as family heirlooms, pets, or other property issues must also be addressed.
2. Personal and Marital Debts
You can use your prenup to divide debt responsibilities both at the time of divorce, as well as during the marriage. For example, if your partner has significant credit card debt before you get married, your prenup can require that they use their income to pay that debt during your marriage or after your divorce. The agreement should also address any other debt issues, such as who becomes responsible for joint debts, student loan debts, or mortgages.
After marital property and debts, perhaps the most important issue you need to address in your premarital agreement is alimony, also known as marital or spousal support. There are a lot of factors you’ll have to consider when agreeing to alimony, such as your and your partner’s income levels, your plans on raising children, the length of your marriage, and any preexisting child support or family obligations. You’ll also have to ensure that you aren’t using the alimony clause as punitive for spousal misbehavior, or in a way that unjustly benefits one spouse at the expense of another.
4. Marital Finances
When you get married and start sharing income or financial obligations, you can use your prenup to outline who is responsible for managing or paying family-related debts. Your agreement can state who is responsible for paying the mortgage, whether you’ll maintain separate bank accounts, whose income will flow into those accounts, how you’ll save for retirement or your children’s college expenses, and similar issues.
5. Lifestyle Clauses
A lifestyle clause is one that primarily addresses your or your spouse’s behavior during marriage. Many of these clauses address infidelity, and what, if anything, will happen if one spouse is unfaithful. While you may want to have a piece of paper that immortalizes your right to receive a hefty payment from your spouse should they ever cheat, you should approach all lifestyle clauses with caution. Not all courts view these clauses in a positive light, and many have invalidated prenups if the lifestyle clauses were too broad or contrary to public policy.
So, if you’re thinking about including any kind of lifestyle clause in your prenup, you need to talk to your partner – and your attorney – about it first. You’ll want to be sure of your goal, agree to a reasonable way of achieving it, and make sure you do so legally.
While you have a lot of room to decide what terms you want your prenup to address, there are some topics that you cannot include. If your agreement contains any of these prohibited topics, a court may throw those individual provisions out, or invalidate the premarital agreement altogether.
1. Child Custody and Child Support
When it comes to ensuring that the needs of a child are protected, judges have the final say. While you and your spouse can agree to child custody and child support terms, the court does not have to honor your agreement. If a court determines that your terms are not in your child’s best interest, it will impose its own decisions on any and all custody and support issues, regardless of what you and your spouse have previously agreed to.
2. Illegal Activity
You cannot use your prenuptial agreement to agree to anything illegal or otherwise prohibited by law. You cannot, for example, use your prenup to divide your interests in your husband’s illegal prostitution business.
3. Alimony Waivers
Most prenups address alimony, and some couples go so far as waiving any right to alimony they’ll have. While one or both spouses waiving alimony is allowed in some states, it is not allowed everywhere, and some courts will throw out a prenup that includes any marital support waiver.
4. Incentivizing Divorce
As a general policy, courts are not allowed to encourage divorce or allow prenuptial agreements that do so. If your prenuptial agreement includes any kind of financial bonus or other kinds of incentives for either you or your partner if you get divorced, it’s unlikely a court will uphold it.
There are many premade or DIY prenuptial agreements available today. While these tools can be a useful starting point for talking about prenup issues, you should not rely on them as enforceable legal contracts. State laws on prenups can differ significantly, and a premade form may not meet the legal standard of your state.
Even if you find a premade form that complies with the laws of your state, you still need to make sure your document fits your individual circumstances. Relying on a template may give you a false sense of security that your prenup is good enough; however if it comes time to use the document, you may discover that it is problematic or omits something important.
Broaching the Prenup Topic
If you’re like most people, the idea of talking to your partner about a prenup is not pleasant. Prenups may be one of the least romantic topics there is, which is perhaps the biggest reason stopping people from making one. If you want to use a prenup in your own marriage, your best bet is to broach the topic delicately.
1. Learn To Address Difficult Topics
Marriage usually requires couples to face difficult, often painful subjects together. Whatever the future may hold, there’s a good chance you and your spouse will have to confront issues that may negatively affect both of you. Learning to deal with these obstacles in a healthy, productive way can make your relationship stronger. Addressing the possibility of divorce in a realistic, constructive manner can help you prepare for other bumps in the road during your life together.
2. Include Your Prenup as Part of Your Financial Plan
Developing a financial plan based on you and your partner’s financial goals will naturally lead to a discussion about a prenup. Not only will a financial plan give you an idea of what you can expect in the future, but it will also help you decide what you want from your plan – and your marriage – as you create it. This focus on the future is a good lead-in for bringing up the possibility of divorce and the importance of having a prenup in place.
3. Protect Your Partner’s Future
Prenups are a lot like life insurance: You never want to use it, but not having it is risky. Should you or your spouse pass away, life insurance policies will ensure that the survivor won’t be left unsupported. Similarly, prenups will ensure that your family is protected in the event of a divorce. Trying to preserve a respectful relationship after you divorce is especially important if you have children, and will also help divide parenting responsibilities. A good prenup will allow you and your spouse to end your marriage with as little acrimony as possible. Without one, you may end up in a lengthy and expensive divorce that does nothing but damage your relationship further.
A prenup is one of the more useful – and least used – legal tools available to couples getting married. A good prenup will benefit you, your partner, and your marriage. Regardless of your circumstances and your certainty that your marriage will last, you owe it to yourself, and your partner, to at least consider a prenuptial agreement.