A “prenup” can spell out which expenses will belong to each individual and which will be for the couple. In addition, a prenup can state where marital assets will go in case of death or divorce, says FedWeek’s recent article entitled “A Prenup May Be Prudent for Later-Life Marriages.”
In some states, a prenuptial agreement is called an "antenuptial agreement" or a "premarital agreement."
Sometimes the word "contract" is used rather than "agreement," as in "prenuptial contract."
An agreement made during marriage, rather than before, is known as a "postnuptial," "post-marital," or "marital" agreement.
For a prenup to be valid, each party should seek the advice of an attorney. These attorneys should be independent of each other, so one attorney shouldn’t represent both parties. The agreement should fully disclose each spouse-to-be assets and liabilities.
Here are some reasons that some people want a prenup:
- Pass separate property to children from your prior marriages. A marrying couple with children from prior marriages may sign a prenup to state what will occur to their assets when they die, so that they can pass on separate property to their children and still provide for each other, if necessary. Without a prenup, a surviving spouse may have the right to claim a large piece of the other spouse's property, resulting in much less for the stepchildren.
- Clarify financial rights. Couples with or without children may just want to clarify their financial rights and responsibilities during marriage.
- Avoid disagreements in a divorce. A couple may want to avoid potential arguments if they divorce, by stating in advance the way in which their property will be divided, and whether or not either spouse will receive alimony (some states won't allow a spouse to give up the right to alimony).
- Protection from debts. These agreements can also be used to protect spouses from each other's debts, and they may also speak to a number of other issues.
To implement a prenup, don’t wait until the last minute.
Some prenups have been ruled invalid by the courts, when one spouse appears to have pressured the other to sign the contract right before the wedding.
Reference: FedWeek (Aug. 25, 2021) “A Prenup May Be Prudent for Later-Life Marriages”