A prenuptial agreement is a contract that two people enter into prior to marriage that deals with the financial consequences of a break-up, should they divorce. Without a prenuptial agreement, couples’ financial affairs are subject to the jurisdiction of their domicile (where they live) when they divorce. To override state laws or protect certain assets and interests, a prenup may be necessary. There are particular sets of circumstances where a prenup may be most attractive and beneficial.
- One partner has much more personal property and wealth than the other. To protect yourself from someone marrying you for financial gain, a prenup can be written to protect premarital assets from division upon divorce.
- One or both of you has children from a previous marriage or some other person to care for. You may want to protect your children should something happen to you, so that they are provided for before your spouse takes your assets.
- One partner is coming into the marriage with substantial debt. In the event of divorce, you may want to protect yourself from division of debt as marital debt, leaving you to pay off half of the bills your spouse already piled up before you married them.
- One of you has significantly less than the other. This is the flipside of the coin. You marry someone who has much more than you, and you want to ensure that if you divorce they can’t leave you with nothing after you’ve grown used to a better lifestyle, particularly if you have children with them. If your divorce could leave you homeless and jobless, or living in an efficiency apartment on public aid, protect yourself. If they want a prenup to protect themselves, you want to include provisions that protects you too.
- You want your final wishes carried out specifically, despite having a spouse. If you have significant premarital assets or heirlooms and you want those distributed according to your wishes despite having a spouse whom the law would otherwise give those assets to upon your death, a prenup can help you.
- You are a business owner or shareholder. In the event of your death or divorce, your spouse could claim a marital property interest in your business, particularly if you’ve conducted that business for a substantial portion of your marriage. A prenup can ensure that your spouse is not a partner in a business where your other partners may not want the unintended partnership.
- You earn much more than your partner. Generally, all income earned during a marriage is marital property. However, a prenup can limit how much alimony or maintenance a spouse can ask for and receive in a divorce.
- You and your spouse have agreed that you will not work during all or part of the marriage. Opting to be a stay-at-home spouse can have a negative impact on your earning potential and ability to provide for yourself and your children should you divorce. A prenup can ensure fair responsibility for support and care of children, taking your work history into account, should you divorce and have limited job opportunities or limited earning potential.
- You own assets jointly and cannot share them with your spouse in the event of a divorce or your death. It could be that you bought income property, a vacation home, a piece of real estate, or some other significant asset with your siblings or father or a friend from college and you are not able to allow your share to become marital property in the event your marriage ends.
- You have or will be earning a professional level degree that will create a rebuttable presumption of high earning potential. In some cases, your professional degree can be considered marital property in that it is assumed someone in the professions has a high earning potential, and this is attributed to the marriage. There are actually experts that people hire during divorce proceedings who can put a value on this and your spouse can attempt to argue that they have a right to half of this intangible value in the event of a divorce or, at least, that you should be entitled to fewer tangible marital assets because you have higher earning potential on your side of the property division.
This article is for general information purposes only. It is not intended as legal advice and it does not constitute establishment of an attorney-client relationship with anyone who reads it or an attempt to create an attorney-client relationship. Keep in mind that the law changes frequently based on legislation and case law. If you have a legal issue that relates to this article’s subject matter, please consult with a licensed attorney to determine your individual rights and to clarify the law with respect to your particular set of facts. If you live in another state, please consult a licensed attorney in your state. Dana Boyle is licensed in the state of Wisconsin.