Whether you call it a Prenuptial Agreement, a Prenup, or a Premarital Agreement, it is a contract between you and your future spouse that determines your financial rights and obligations if your marriage ends as a result of divorce or death.
Talking about a Prenuptial Agreement helps you and your fiancé openly discuss how you and your fiancé will handle your finances during your marriage.
It is best to discuss these issues as far in advance of your wedding as possible. You do not want to be talking about who pays for what and who will have ownership of which bank account when it is time to be talking about the menu for your wedding day.
If you decide that it is too close to your wedding date to start the conversation about a Prenuptial Agreement, you can wait and agree to work on a Postnuptial Agreement. It is a similar document that is signed after you are married.
When negotiating a Prenuptial Agreement, full disclosure is an essential requirement.
What this means is that both you and your future spouse must provide detailed financial information to each other. This includes information about your assets, debts, income, interests in property, businesses, trusts, and information about valuable personal property, such as family heirlooms, paintings, rugs, jewelry, etc.
Once you both have the information about each other’s property, it is easier to determine what will happen to premarital property in terms of any increase in its value over the course of your marriage. You will want to be clear about what will happen to individually owned property such as artwork, jewelry, bank accounts, homes, condos, and other property.
Many people who call me for information are surprised when I tell them that the funds that accrue in their retirement accounts, 401(k) accounts, and pension plans during their marriage are considered marital property.
They are sometimes equally shocked to learn that the money earned from a job during marriage is also considered marital property even if the money earned is deposited into a separately titled account. Of course, how all of these assets will be divided in the event of a divorce or in the event of the death of either you or your spouse, can be determined in advance by entering into a Prenuptial Agreement.
If you have a Prenuptial Agreement and do eventually separate, your Agreement can act as a Separation Agreement.
It is then much easier to resolve all the issues and move on with your lives. If you do not have a Prenuptial Agreement and cannot agree on terms for a Separation Agreement with your spouse, you lose control over the outcome and a Judge will eventually dictate a division of your assets.
It is always best to speak to an attorney who has experience drafting Prenuptial Agreements and Postnuptial Agreements so you can determine if it makes sense for you to have one.
It is worth a call so you can have the right understanding and information to make an informed decision.