A prenuptial agreement (or a prenup) is an agreement signed before marriage that outlines what happens to each spouse’s financial assets in the event of divorce or death. The prenup determines what assets are marital and what assets are not. A prenup is often used when spouses have property and financial assets worth guarding. This protects each spouse’s personal assets that they have inherited from family members, assets they have obtained before marriage, or income they have generated before marriage. Prenups often include the division of property, investments, businesses, estate planning.
Who needs a Prenup?
A common misconception is that prenups are only needed for those that are super wealthy. However, anyone who has personal assets, liabilities, or property before marriage, should consider a prenup. If you have significant assets you have gained prior to marriage it is important you consider a prenup. Also, a prenup can help clearly define what financial responsibilities each spouse has in the relationship. If you do not have any separate assets or significant marital assets, a prenup may not be as beneficial.
Can a Prenup Prevent Me from Paying Alimony?
Usually, prenups cover any type of alimony payments. This means that the spouse with the prenup agreement will not have to cover any spousal support payments. To ensure that the prenup prevents the other spouse from being awarded alimony, the prenup must clearly state that the spouse in which the prenup protects will not be liable for paying any alimony. In special cases, the court will void the prenup and award alimony. This usually only happens when one party did not sign the agreement freely or if the agreement is inherently unreasonable. In addition to alimony, if any spouse has accumulated debt prior to marriage it is important to avoid paying off these debts. In the event of a divorce, the court will see routine assistance and might void the prenup agreement because the agreement was not honored by the parties in the past.
Does a Will Supersede a Prenup?
If the deceased leaves a will behind, the prenup will likely be superseded but it depends on the terms of the will. The will must have clear language addressing the prenup and its intent to supersede the prenup. Specifically, the will must have clear language to revoke or modify the prenup. If the deceased does not leave a will, the prenup will still be in effect after the deceased has passed. In the case that the deceased does not leave a will, the estate would have to go through probate court where the assets are distributed according to state law. The probate court will consider the prenup, which would prevent the other spouse from inheriting any of the deceased assets during the probate process.
What is a Full Financial Disclosure?
Before entering a prenup, each spouse must honestly disclose their finances to the other spouse. The financial disclosure should include income, assets, and debts. This helps each spouse identify their rights to the property and what rights they are revoking at the outset of the marriage by signing the prenup. Lack of full financial disclosure may result in a void prenup agreement, and may be considered fraud by a court. The full financial disclosure should be in writing and should include a section where both parties acknowledge that they have read the full financial disclosures, understand what it means, and have had the opportunity to consult with an attorney about the prenup.