Creating Strong Prenuptial Agreements
Prenuptial agreements can protect a couple’s assets even during divorce. Here’s how to make a strong prenuptial agreement.
To make a strong prenuptial agreement, work with an attorney during the drafting process. Both parties should be honest about their assets, fair with their division requests, and conduct thorough research on the differences in marital and separate assets.
Related: 9 Steps to a Fair Prenuptial Agreement
What is a prenuptial agreement?
A prenuptial agreement (also referred to as a “premarital agreement” or “prenup”) is a legal contract outlining a couple’s properties and finances in the case of a divorce. Couples who want to divide assets within their own terms are among those who commonly seek prenups. Prenups help guarantee asset division isn’t entirely up to a state’s property laws or a judge.
What do prenups protect?
Each state has different rules regarding prenuptial agreements. Common topics in a prenup include:
- Income
- Debts
- Real estate
- Present assets
- Future assets
- Spousal support
When drafting a prenup, couples have complete control over asset division but should consult with family/divorce lawyers to confirm the agreement follows their state of residency’s divorce guidelines.
Related: The Relationship Between Prenups and Divorce: Does a Prenup Make Divorce More Likely?
Elements of a Strong Prenup
A strong prenup may help couples avoid potential financial disputes. Consider taking the following steps when drafting a prenup:
1. Consult an attorney
Working with an attorney can help parties include their best interests and wishes in the drafted prenup. Both parties should consult separate attorneys to avoid any potential coercion or manipulation during the drafting process.
2. Do not use an Internet template
States have different divorce laws. Using a prenup template may jeopardize the validity of your prenup because the template may not apply to your state of residency’s prenup requirements. Couples should draft a prenup that is unique to their financial situation.
3. List out the assets of each spouse
Creating a list of each spouse’s assets and debts can simplify the process of dividing financial responsibilities. Listing each spouse’s assets can encourage transparency from both parties and ease potential emotional distress during the process.
4. Differentiate marital property from separate property
Marital property refers to all assets a couple acquired during marriage, while separate property refers to all assets a couple either acquired before marriage or will individually own after marriage. Spouses should be clear about which properties will remain under the original owner during marriage. Strong prenups provide a detailed plan on how shared property will be divided in the case of a divorce.
5. Be honest and fair during the drafting process
A couple may choose to not file for a prenup in fear it will create tension in the marriage or make divorce more likely. Being honest and fair during the drafting process can alleviate any precautions surrounding prenups and can provide financial clarity for both parties. Judges are likely to reject dishonest or unfair prenups.
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