Prenuptial agreements have been unfairly characterized as “unromantic”. To the contrary, a prenuptial agreement, a.k.a. premarital agreement, is a very important part of the multitude of considerations in preparation for a marriage relationship. Proper planning will remove a lot of friction and stress. Below is a list of circumstances in which couples should consider a prenuptial agreement (or a postnuptial agreement if they are already married):
1 – Children from prior relationships. When children are involved, the planning you do is not just for yourself and your future spouse, but it also is for the protection of any children you have currently. A prenuptial agreement will define the rights of spouses in the event of divorce, death, or incapacity of one spouse. If parents do not give adequate consideration to a prenuptial agreement, there could be significant unintended consequences for the benefits of the children of a spouse who does not survive or who does not have capacity to sign legal documents at some point in the future.
2 – Marriages later in life. Couples contemplating marriage later in life should strongly consider whether a prenuptial agreement is appropriate for them (especially when one or both have children from prior relationships as discussed above). When marrying later in life, spouses generally have built up assets of their own and usually desire to maintain their assets and income on separate tracks. These issues should be considered with an estate plan to make sure that there are no conflicting terms that could create litigation.
3 – Disparity in debt and/or assets. If there are differences in the value of debt or assets of the two future spouses, it is critical to have a prenuptial agreement to set forth the rights and obligations of one spouse with regard to the debts or assets of the other. For example, if a person is about to declare bankruptcy, there should be careful consideration to what the other spouse is going to be liable for. Further consideration should be given to whether one or both spouses expect any future gifts or inheritances of a significant amount.
These are just a few of the situations in which a prenuptial or postnuptial agreement should be considered. All situations are different, so people contemplating marriage should consult with a lawyer to make sure that the most effective planning is being done before making the plunge.