21 Apr What is a Prenuptial or Premarital Agreement?
A prenuptial agreement is a contract entered into between prospective spouses in anticipation and consideration of marriage. Parties often enter into prenuptial agreements to protect themselves and the other spouse in case a divorce occurs. These agreements are common and valid if certain requirements are met.
Who Should Consider a Prenuptial Agreement?
People often assume prenuptial agreements are for the ultra-rich, and these contracts do not apply to them. Without question, people of substantial means use prenuptial agreements to protect their wealth. However, anyone from any social class can benefit from a prenup. While bringing up the topic of a prenuptial agreement may be uncomfortable, it is important to have an open discussion with the other spouse to determine whether it is right for you.
Are Prenuptial Agreements Enforceable?
A prenuptial agreement is a contract and, like most contracts, are generally enforceable. With that said, because a prenups deals with married spouses and families, it is may be scrutinized by courts with more care.
The following are key to ensuring that your prenuptial agreement will be valid and enforceable:
- Full disclosure. Creating a prenuptial agreement can be an emotional process and requires open and honest communication between both prospective spouses. It is vital that all information concerning assets or debts is disclosed. If you or your spouse have excluded important information from the agreement, the court may invalidate the agreement if the marriage ends.
- Each party should have adequate time to review and understand the agreement prior to the marriage.
- The agreement must be reasonable. If the terms of the agreement are grossly unfair and would result in one spouse being wholly without a means of any financial support upon divorce, a court may determine that the prenuptial agreement is not valid.
- Independent counsel. A prenuptial agreement is an important legal document. Before signing a prenup, you should seek independent legal advice to ensure that your best interests are represented and that you understand every aspect of the agreement.
Regardless of your economic standing, if a prenuptial agreement is fair and both parties enter into it willingly and with full knowledge of the circumstances, it can be very helpful and beneficial to both spouses. A prenup can support your estate planning goals, protect separately-held property, and reduce future conflict.