A prenuptial agreement is a contract crafted by future spouses. By signing a contract before getting married, engaged couples can strengthen their relationship with one another and reduce their chances of a contentious divorce.
The terms of a prenuptial agreement can clarify expectations for marriage and remove the likelihood of a contentious court battle if spouses divorce. Prenuptial agreements can also provide clarity regarding the assets of both spouses.
For those who have already purchased homes, started businesses or set aside savings for retirement before getting married, signing a prenuptial agreement is a common means of protecting those assets.
Divorce can endanger separate property
Spouses typically share their income and assets with one another, but they may have property that belongs to each spouse separately. They can potentially retain those assets if the marriage ends in divorce.
Resources that people accumulated before marriage or purchased with premarital income can be separate when spouses divorce. However, insufficient financial records and claims of commingling can endanger property.
When spouses draft prenuptial agreements, they generally need to make thorough financial disclosures to one another. Those disclosures should include inventories of pre-existing resources, as well as any outstanding debts. Spouses can negotiate agreements that allow them to keep those assets as separate property if they divorce.
They can even make arrangements in advance for maintaining separate property without exposing those resources to claims of commingling in the future. Houses, businesses and financial accounts can remain separate if spouses acknowledge those assets in a contract.
For those who already have valuable property prior to marriage, a prenuptial agreement can be an important investment. Negotiating balanced terms with a spouse can help people preserve their resources and avoid contentious divorces.
