Key Aspects of a Prenuptial

A prenuptial agreement may be used for estate planning and asset protection.

Once considered a tool for the wealthy, prenuptial agreements are growing in prevalence. Today, many people perceive them as practical tools that protect wealth and property. The terms of a prenuptial agreement are often flexible, provided they do not infringe upon civil or criminal laws. Many states, for example, do not recognize statements about child support. On the other hand, provisions regularly considered as valid include those for premarital property, spousal support and premarital debt.

Premarital Property

One of the most basic functions of a prenuptial agreement is to protect a person's assets -- including real estate, financial investments and intellectual property -- that were acquired before the wedding. In signing the contract, therefore, both parties often waive all interest in the other's assets. For explicit protection, many prenuptial agreements state that upon divorce, individuals retain their property without claim to title by the other party. Provisions of the agreement may also address post-wedding additions to or increases in the premarital assets.

Estate Planning

In some instances, the right to manage or control property is addressed by the prenuptial agreement. For example, a couple entering into a second marriage may use the contract to stipulate how proceeds of the marital home sale and respective assets are divided upon death. This often preserves assets for children from previous marriages. Without such an agreement, the deceased spouse may leave all property to his children and omit those of the other spouse. To protect the rights of the surviving spouse, a prenuptial agreement may stipulate she can live in the marital home until death. In this manner, property-management rights are granted to that individual. Additional provisions concerning the lease, mortgage or sale of the marital home are likely to be contained within the contract as well. Similarly, in the event of divorce, the prenuptial agreement can state how marital property is to be divided.

Spousal Support

Spousal support is paid from one spouse to the other in the event of divorce. It allows the lower-income spouse to afford basic living expenses or to maintain an established lifestyle. Prenuptial agreements may address this issue by confirming that one party will provide spousal support to the other. Variables concerning this payment, however, may be provided for in the contract. For example, the agreement may stipulate that the spousal support never exceeds a specific income percentage, or the support may be incrementally tiered, depending on how long the marriage lasts. Spousal support may also be subject to terms and may end if the recipient spouse remarries or earns a specific income.

Premarital Debt

One crucial aspect of a prenuptial agreement is that both parties must disclose all of their assets and liabilities. In turn, the agreement can provide for distribution of those debts in the event of a divorce. Many contracts stipulate that individual debt belongs to the person who accumulated it prior to the marriage. Additional considerations, however, may pertain to the use of one person's premarital property to pay another's premarital debts, such as a home equity loan satisfying student loans. In this instance, the paying party may negotiate whether she needs to be reimbursed or if the payment is a gift.

References

• DivorceSource.com: Key Components of Prenuptial Agreements; David S. Slepkow, Esq.
• MyFamilyLaw.com: Prenuptial Agreements and the Amount of Support
• Living Trust Network: Prenuptial Agreements Serve Important Estate Planning Function; Paul Kraft, Esq.; October 2010
• Peace Talks: Premarital Checklist
• Sheehan, Phinney, Bass & Green: Prenuptial Agreements, Why Raise That Subject?; February 2011