Protect your assets when getting married: Prenuptial Agreement
What we’ll cover
What is a Prenuptial Agreement?
A Prenuptial Agreement is a financial contract between two people before they are married. Often called Prenups, Prenuptial Agreements are two-way contracts intended to protect both spouses' assets and to outline who carries the burden of specific debts. These documents outline the assets and debts of each person and how these assets and debts should be managed if the relationship dissolves or a spouse dies.
Prenups are not just for the rich and famous, they are suitable for any couple who wants to responsibly manage their finances, whether they are together or separate.
When to use a Prenuptial Agreement:
- You want to decide how assets each of you already own will be managed before you marry.
- You want to protect you or your children's expected inheritance.
- You plan on taking on debt you don't want your spouse to be liable for.
- You want to protect a personally-owned business or business partners ask you to shield your mutually-owned business.
- You do not want your default state laws to control the distribution of property should you divorce.
Sample Prenuptial Agreement
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This ("Agreement") is made , by and between (""), an adult residing in , , and (""), an adult residing in , , in consideration of the contemplated marriage of the above-named parties. This Agreement shall not be effective until the marriage contemplated by the parties is solemnized.
RECITALS. This Agreement is made on the basis of the following facts:
. The parties contemplate marriage to one another in the immediate future.
. Both parties have children.
. The parties desire to define their rights and responsibilities regarding property and financial matters to the extent these can be foreseen.
AGREEMENT
In consideration of the marriage about to be entered into by and between the parties and other valuable consideration as described below, the parties mutually agree to the following:
e. Pension Benefits. Each party reserves the right to retain as his or her sole and absolute separate property, the entire interest in pension benefits now vested, and the right to manage, control, transfer, and convey all such property and dispose of the same by will, beneficiary designation or otherwise, without any interference from the other. The parties acknowledge that this Agreement shall constitute an effective waiver of any rights in the other's pension benefit plans. Furthermore, each party agrees to execute whatever additional waiver document may be necessary or useful to confirm such waiver of rights to the other party's pension benefit plans.
e. Each party waives the right of reimbursement under Family Code 2640, for the party's separate property contributions to the acquisition of property of the community property estate, and the party's separate property contributions to the acquisition of property of the other party's separate property estate, regardless of tracing to the source.
f. Each party waives the right of reimbursement under Family Code 2640, for the party's separate property contributions to the acquisition of property of the community property estate, and the party's separate property contributions to the acquisition of property of the other party's separate property estate, regardless of tracing to the source.
presently owned by presently owned by leased in the name of shall not be affected by this Agreement. shall shall not be affected by this Agreement. shall shall be considered the community property of both parties.shall be considered the sole and separate property of .
The expenses associated with the maintenance of the residence shall be paid as follows:
. payments shall be made
. Payment of all real estate taxes shall be made
. Insurance premiums for such residence shall be paid
.
. LIVING EXPENSES. It is the expectation of the parties that their personal earnings, and the income from the assets and investments of either or both parties, shall be used for joint household expenses or other joint purposes. However, such use shall not be construed to imply joint ownership of any assets owned by either party.
Each party agrees to contribute into a joint checking account out of which common living expenses will be paid.
Common living expenses include:
- food
- utilities
- household supplies
- household furnishings
- phone service
- cable television
- entertainment
- fitness club membership
- clothing
- personal items
- credit cards
- student loans
- car payments
- car fuel
- car maintenance
- car insurance
- renters insurance
- income taxes
- property insurance
- medical insurance
- medical expenses
and shall be paid from the joint checking account.
Nothing in this Agreement shall limit the obligation of each party to contribute such further amounts as are reasonable and necessary from time to time for the above purposes.
At any time that the balance of this account exceeds or is greater than the amount reasonably necessary to pay these common expenses, then such excess shall be transferred to a joint savings account. Such savings account shall be used for whatever purposes are agreed upon by the parties. Items purchased through joint accounts shall be jointly owned.
From their respective separate accounts, the parties shall pay for their own:
- food
- utilities
- household supplies
- household furnishings
- phone service
- cable television
- entertainment
- fitness club membership
- clothing
- personal items
- credit cards
- student loans
- car payment
- car fuel
- car maintenance
- car insurance
- renters insurance
- income taxes
- property insurance
- medical insurance
- medical expenses
During the course of the marriage, including medical expensesWith respect to credit card accounts, Purchases which constitute joint expenses shall be paid for from joint accounts.
The parties agree and understand that nothing in this Agreement shall preclude them from acquiring property interests during the course of their marriage as joint tenants with rights of survivorship or as tenants in common with undivided interests. Additionally, nothing in this Agreement shall preclude them from making binding transfers of real or personal property to the other at any time during the marriage.The parties agree that all property, whether real or personal, acquired by either of them after the marriage ceremony using joint funds, shall be owned
. TAXES. Nothing in this Agreement shall be construed as waiving (i) any rights of the parties to report their income for federal or state income tax purposes in the same manner as permissible for any other spouses, (ii) any rights provided for spouses under the federal gift tax laws with reference to gifts, or (iii) any rights under the federal estate tax laws with reference to any transfer to which such laws may apply. If the parties elect to file federal and state income tax returns on a joint, rather than on a separate, return with the other, this election shall not create any community property or any other rights or interests in contravention of this Agreement. If the parties elect to file a joint income tax return during their marriage, each shall be liable for any and all taxes associated with his/her separate property. jointly.separately.
agrees that the following items will be transferred to as one hundred percent 's sole and separate property. acknowledges and agrees that this transfer negatively affects 's rights in this property.
agrees that the following items which are currently the sole and separate property of will be transmuted into community property shared with .
has the following child:
renren, as long as married to , shall provide a home and reasonable support for the health, education, maintenance and support of , child(ren) of , without establishing any legal requirement to do so upon separation or dissolution of the marriage. is not and shall not be liable for the necessary expenses associated with the health, education, maintenance, and support of 's child(ren). , as long as married to , shall provide a home and reasonable support for the health, education, maintenance and support of , child(ren) of , without establishing any legal requirement to do so upon separation or dissolution of the marriage. is not and shall not be liable for the necessary expenses associated with the health, education, maintenance, and support of 's child(ren). The parties will jointly provide a home and reasonable support for the health, education, maintenance and support of any children born to or adopted together by them during their marriage, without establishing any legal requirement to do so upon separation or dissolution of the marriage.
The parties will jointly provide a home and the other costs of health, education, maintenance and support for any children born to or adopted together by them during their marriage, without establishing any legal requirement to do so upon separation or dissolution of the marriage.
the Uniform Premarital Agreement Act and
. Each party shall have an equal interest in all property acquired by either party during the course of the marriage (except property that is merely the result of an increase in the value of property owned separately by the parties prior to the marriage, as listed on the attached schedules).
. Each party shall have a proportionate interest in the increase in value (during the marriage) of the homestead real estate, that proportion to reflect the relative values of the contributions, both monetary and in-kind, toward the necessary household expenses and childcare/household duties during the course of the marriage.
. All savings, investments, retirement accounts, and all property listed on the attached schedules as separate property (owned by a party prior to the marriage) shall remain the separate property of that party who brought such property into the marriage, including any appreciation, income, or other increase to such property.
. All joint property and accounts shall be divided equally.
. Any income tax liability, refund, or benefit in the year of the separation and/or dissolution of marriage shall be allocated prorata to the parties based upon the data which caused the tax result.
. The parties shall have joint custody of any children born to or adopted into the marriage. Such joint custody entitles each party to equal visitation time, or time which is otherwise fair and equitable.
.
Each party has been self-supporting for a period of time prior to the contemplated marriage. Nothing in this Agreement shall be construed so as to waive the right of either party to inherit from the other or to forego any right of election in the estate of the other. Each party agrees that if he or she survives the death of the other, such party will make no claim to any part of the real or personal property of the other. In consideration of such promise and in consideration of the contemplated marriage, each party knowingly, intentionally, and voluntarily waives and relinquishes any right of dower, curtesy, homestead, inheritance, descent, distributive share, or other statutory or legal right, now or later created, to share as surviving spouse in the distribution of the estate of the other party. The parties agree that it is their mutual intent that neither shall have or acquire any right, title, or claim in and to the real or personal property of the other by virtue of the marriage. The estate of each party in the property now owned by either of them, or acquired after the date of marriage by either of them, shall descend to or vest in his or her heirs at law, legatees, or devisees, as may be prescribed by his or her Last Will and Testament or by the laws of the state where the decedent was domiciled at the time of death, as though no marriage had taken place between them.
However, the and shall pass to the survivor
The parties understand and agree that nothing in this Agreement shall prevent them from naming the other party as a beneficiary in his or her Last Will and Testament, life insurance policy or retirement plan, which transfer, bequest, or designation shall take precedence over any other provision of this Agreement.
. ADDITIONAL INSTRUMENTS. Without any additional consideration, each party shall promptly, at the request of the other, execute, acknowledge and deliver from time to time whatever additional instruments may be required in order to accomplish the intent of this Agreement.
Any controversies or disputes arising out of or relating to this Agreement will be submitted to mediation in accordance with any statutory rules of mediation. If mediation does not successfully resolve the dispute, the parties may proceed to seek an alternative form of resolution in accordance with any other rights and remedies afforded to them by law. Any controversies or disputes arising out of or relating to this Agreement will be resolved by binding arbitration under the rules of the American Arbitration Association. The arbitrator's decision will be final, and any judgment may be entered upon it by any court having proper jurisdiction.Any controversies or disputes arising out of or relating to this Agreement will be submitted to mediation in accordance with any statutory rules of mediation. If mediation is not successful in resolving the entire dispute or is unavailable, any outstanding issues will be submitted to final and binding arbitration under the rules of the American Arbitration Association. The arbitrator's award will be final, and judgment may be entered upon it by any court having proper jurisdiction.
. FULL DISCLOSURE. Each of the parties (i) is of lawful age, (ii) is competent to contract, (iii) is free to enter into the marriage contemplated, (iv) has full knowledge of the other party's property, debts and income, and (v) voluntarily enters into this Agreement. Additionally, each party has full knowledge of the terms and provisions of this Agreement. Specifically, the parties acknowledge and agree that they have disclosed to the other party (prior to the signing of this Agreement), the extent and probable value of their respective individual property interests as of the date of this Agreement, by delivering schedules to the other party that reflect those interests, and which schedules were signed by the respective owner and by the party receiving the schedule. The parties specifically acknowledge receipt of the above schedules, which are understood and agreed by the parties to represent a full and complete listing of their respective property interests as of the date of this Agreement.
. MISCELLANEOUS PROVISIONS.
a. This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, administrators, personal representatives, successors, and assigns.
b. This Agreement sets forth the entire Agreement between the parties with regard to the subject matter of this Agreement. All prior and contemporaneous conversations, negotiations, possible and alleged agreements, and representations with respect to the subject matter of this Agreement are waived, and merged into this Agreement.
c. If any of the provisions of this Agreement shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid or enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.
d. Each party acknowledges that he or she has been advised to seek the advice of a separate lawyer and has had the opportunity to seek the advice of a separate lawyer.
e. This Agreement may be altered, amended, modified, revoked or canceled only by an instrument in writing, executed by and with notarial acknowledgements of the signatures, and by no other means.
Dated ____________________, _____, at , .
__________________________________
__________________________________
On this _____ day of ____________________, _____, before me, ______________________________, the undersigned officer, personally appeared and , known to me (or proved to me on the oath of ______________________________) to be the persons who are described in and who executed the within and foregoing instrument, and acknowledged to me that they executed the same.
Before me, a Notary Public (or justice of the peace) in and for said county, personally appeared the above named and , who acknowledged that they did sign the foregoing instrument, and that the same is their free act and deed. In testimony whereof, I have hereunto subscribed my name at ________________________________, this _____ day of ____________________, _____.
The foregoing instrument was acknowledged before me this _____ day of ____________________, _____, by and .
The foregoing instrument was acknowledged before me, by means of ☐ physical presence or ☐ online notarization, this _____ day of ____________________, _____ by and , who are personally known to me or who have produced ________________________________ as identification.
This instrument was acknowledged before me on this _____ day of ____________________, _____ by and .
On this _____ day of ____________________, _____, before me personally appeared and , to me known to be the persons described in and who executed the foregoing instrument, and acknowledged that they executed same as their free act and deed.
On this _____ day of ____________________, _____, before me, ________________________________, personally appeared and , known to me (or satisfactorily proven) to be the persons whose names are subscribed to the within instrument and acknowledged that they executed the same as for the purposes therein contained.
On this _____ day of ____________________, _____, before me, the undersigned, Notary Public for the State of Vermont, personally appeared and , to me known (or to me proved) to be the identical persons named in and who executed the above , and acknowledged that such persons executed it as such persons' voluntary act and deed.
The foregoing instrument was acknowledged before me this _____ day of ____________________, _____, by and .
In witness whereof I hereunto set my hand and official seal.
Notary Public
Signature of person taking acknowledgment
_________________________________
Name typed, printed, or stamped
Title (and Rank)
_________________________________
Title or rank
My commission expires ____________
_________________________________
Serial number (if applicable)
Serial number, if any
Notary Address:
_________________________________
_________________________________
_________________________________
_________________________________
EXHIBIT A
FINANCIAL INFORMATION
| Assets | Value |
| Assets | Account Name, Number, Address, Value |
| Total Assets |
| Liabilities/Debts | Account Name, Number, Address, Amount |
| Total Liabilities/Debts |
| Net Worth |
Annual Income
| Total Annual Income |
I verify that the above information is true and correct to the best of my knowledge.
Signed on this _____ day of ______________________________, _____.
__________________________________
I acknowledge receipt of a copy of this exhibit.
__________________________________
EXHIBIT B
FINANCIAL INFORMATION
| Assets | Value |
| Assets | Account Name, Number, Address, Value |
| Total Assets |
| Liabilities/Debts | Account Name, Number, Address, Amount |
| Total Liabilities/Debts |
| Net Worth |
Annual Income
| Total Annual Income |
I verify that the above information is true and correct to the best of my knowledge.
Signed on this _____ day of ______________________________, _____.
__________________________________
I acknowledge receipt of a copy of this exhibit.
__________________________________
| - | All earnings and income of |
| - | The entire interest in retirement or pension benefits now vested, or that become vested in the future, in accounts named in Exhibit 'B' of this Agreement belonging to |
| - | The marital residence property at , , |
further understands, acknowledges, and agrees that his/her financial interest in the assets set forth below is adversely affected in that is agreeing to transmute all of his/her separate property interest in the following assets to the community estate of and as one hundred percent community property.
| - | The marital residence property at , , |
further understands, acknowledges, and agrees that his/her financial interest in the assets set forth below is adversely affected in that is agreeing to transmute all of his/her separate property interest in the following assets to as one hundred percent 's sole and separate property.
| - | All earnings and income of |
| - | The entire interest in retirement or pension benefits now vested, or that become vested in the future, in accounts named in Exhibit 'A' of this Agreement belonging to |
| - | The marital residence property at , , |
further understands, acknowledges, and agrees that his/her financial interest in the assets set forth below is adversely affected in that is agreeing to transmute all of his/her separate property interest in the following assets to the community estate of and as one hundred percent community property.
| - | The marital residence property at , , |
further understands, acknowledges, and agrees that his/her financial interest in the assets set forth below is adversely affected in that is agreeing to transmute all of his/her separate property interest in the following assets to as one hundred percent 's sole and separate property.
Each party should sign the Transmutation Agreement with their name included as Exhibits 'C' and 'D' of this Agreement. These Exhibits are necessary to properly classify your property and assets the way that you specified in this Agreement.
Under Family Code Section 1615(c)(2)(B), each party must be given seven calendar days from the time the parties were first presented with the and the time it was signed, regardless of whether they are represented by counsel. This is to allow both parties to thoroughly review the agreement and seek separate and independent legal counsel. This requirement does not apply to non-substantive amendments that do not change the terms of the agreement. This requirement must be signed off by both parties in the agreement.
In order for the to be enforced in California, the court must be able to find that each party was independently represented by separate attorneys. Each representing attorney may sign the certificate of independent legal review at the end of this agreement.
Under Family Code Section 1615(c)(3), if the spouse against whom enforcement is sought is unrepresented by counsel, the court must be able to find that the unrepresented spouse (1) was fully informed of the terms and basic effect of the agreement as well as the rights and obligations the party was giving up by signing the agreement, and (2) was proficient in the language in which the explanation of the party's rights was conducted and in which the agreement was written. The explanation of these relinquished rights and obligations must be memorialized in writing and delivered to the unrepresented spouse prior to signing the agreement. The unrepresented party shall, on or before the signing of the premarital agreement, execute a document declaring that he or she received the information required by this paragraph and indicating who provided that information.
About Prenuptial Agreements
Learn how to protect your assets when getting married
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How To Write a Prenuptial Agreement
A Prenuptial Agreement, also known as a Prenup, is an agreement between prospective spouses, made in contemplation of marriage. The Prenup becomes effective upon marriage, but should be discussed by the couple well in advance of the marriage. Sufficient time should be permitted to allow both parties to consult their separate attorneys and to sufficiently consider the contents of the agreement. Otherwise, one party may later claim that the agreement is invalid or unenforceable because it was misleading or signed under pressure. A Prenuptial Agreement is generally unenforceable if it was signed after the marriage ceremony. A Postnuptial Agreement may be used after a couple is married.
From a legal perspective, marriage can be viewed similarly to a business arrangement. Business transactions should not be entered into without documenting the terms of the arrangement in writing. Likewise, the parties in a marriage should carefully consider how issues will be handled during or after a marriage. Without an agreement, the probate court (upon death) or the divorce court will impose an agreement on the parties in those circumstances.
Following are some provisions that can be found in Prenuptial Agreements, along with more detailed information about the provisions and what they mean.
Separate Property
The Prenuptial Agreement can include provisions specifying the rights of the parties to certain property owned before the marriage and property acquired after the marriage. It is common to agree that any property owned by a party before the marriage will remain the separate property of that party. (Take care not to commingle such separate property with other assets of the couple.) Another option permits the couple to specify that property acquired during the course of the marriage will also remain the separate property of the acquiring spouse.
If a couple lives in a "community property state" at any time during the marriage, then by default, all real and personal property, wherever located, acquired after the marriage ceremony (except property acquired by gift or inheritance) will automatically be "community property" of the couple. This means that such property is owned one-half by each party, regardless of who may have separately purchased the property. However, this community property scheme can be altered by the Prenuptial Agreement so that each party can purchase and own his or her separate property.
When property is being sold by one spouse, it is common for the buyer to expect both spouses to sign the transfer document even if the property is titled only in the name of one spouse. This is because it is so frequently the case that both spouses have marital rights in the property, and so the signature of the non-owner spouse is required in order to remove that possibility. The Prenuptial Agreement can include a provision obligating the non-owner spouse to sign such documents upon request.
Earnings during Marriage
Governing law usually provides that income earned by either spouse during the marriage is jointly owned property. This presumption can be reversed by including in the Prenup a provision stating that the earnings of each party will remain that party's separate property. Care should be taken not to commingle such separate property with other assets of the couple.
The parties may desire to use their earnings for the payment of joint household expenses, but the agreement will clarify that such usage should not be interpreted as implying joint ownership of the earnings.
Living Expenses and Debts
Normally, spouses (the parties) are responsible for the debts of each other if such debts were incurred for the "necessities of life," such as food, shelter and medical care. However, the parties may want to prescribe separate treatment for certain expenses. A Prenuptial Agreement may also permit the couple to allocate responsibility for debts incurred using credit cards.
A couple may want to specify how living expenses will be handled. One option is to pay for joint living expenses using a joint checking account which is funded with contributions from both parties. Typical living expenses may be listed and can be classified as either joint or separate expenses. The parties may also want to compose their own custom arrangement.
The Debts provision typically states that debts incurred before the marriage will remain the responsibility of the party who incurred that debt. An optional provision is sometimes also used, which allows the parties to maintain separate liability for debts incurred during the marriage.
Joint Ownership of Property
The parties can determine in the Prenuptial Agreement how all property acquired after the marriage will be owned. Alternatively, the Prenup can be silent on that topic, allowing them to make that decision on a case-by-case basis as property is acquired. Here are some options typically considered for property ownership.
- Joint Tenancy: Property held by spouses in "joint tenancy with rights of survivorship" will pass to the survivor upon the death of the first spouse. The property passes irrespective of any provision to the contrary in a will.
- Tenants In Common: In contrast, each party can hold an undivided one-half interest in any property as "tenants in common," in which case each person's one-half interest will pass to that person's beneficiaries at death. If the person has a will, the one-half interest in the property will pass according to the terms of the person's will. If the spouse dies intestate (without a valid will), ownership of property other than real estate will be determined by the laws of the state where the person was a resident at death. If the property is real estate, ownership will be determined by the laws of the state in which the real estate is located.
Taxes
Prenuptial Agreements typically include a provision allowing the couple to take advantage of certain income, gift, and estate tax provisions that benefit married couples. These benefits might not otherwise be available, depending on the interpretation of the Prenup. For example, the benefit that might be obtained by filing joint federal or state income tax returns can be preserved.
In addition, a married couple may make joint annual gifts. Most transfers from one spouse to the other are also tax-free, and there is an unlimited marital deduction under the federal estate tax law for the transfer of property to the surviving spouse upon the death of the first spouse. For further information, consult your accountant or lawyer.
Names of Children and Support of Children
The Prenuptial Agreement usually includes the names of any children from prior relationships as further evidence of the reasons for entering the agreement, which supports the enforceability of the agreement.
The support provision can state that a step-parent may support step-children without establishing the legal responsibility to do so either during the marriage or upon separation. The agreement does not contain provisions regarding the support of natural children of the couple in the event of divorce because such agreements are viewed as contrary to public policy. The concern is that the couple might enter into an agreement that would be unfair to those children. The determination of such child support is within the sole authority of the divorce court.
Dissolution of Marriage
Discussing a property settlement and alimony in the Prenuptial Agreement does not suggest that a separation or divorce will occur. However, the parties may realize that such events are not uncommon. Therefore, the parties may want to express their intentions regarding how their property will be divided if they separate or divorce.
Traditionally, the judicial system has opposed settlement agreements made prior to marriage. However, it is becoming more common for divorce courts to honor the property settlement provisions of the Prenuptial Agreement. Common settlement provisions are presented for inclusion in the Prenup. The parties may also compose their own provisions. Whether a court will ultimately follow these provisions will depend upon the jurisdiction in which the parties reside at the time of the separation or dissolution. To ensure compliance with local law, the parties may want to consult a lawyer. A lawyer may want to review the provisions of the Prenuptial Agreement if the parties change their state of residence.
Support of Spouse
While some states prohibit this, other states allow couples to decide whether one party will be entitled to alimony or not. The current legal trend is against awarding alimony upon divorce. If each spouse is self-supporting, the parties may agree not to seek alimony in the event of separation or divorce. However, merely reciting that the parties are self-supporting will not be persuasive if the facts at the time prove otherwise. The divorce court considering the support issue will make an independent determination of the need for alimony.
Death of a Spouse
The Prenuptial Agreement can make provisions regarding the distribution of property upon the death of a spouse.
Disinheritance of Spouse
Most states have enacted laws that prohibit the total disinheritance of a spouse. These laws create an interest by one spouse in the other spouse's property known as "dower" or "curtesy," allowing a spouse to elect to take a share of the deceased spouse's estate as specified by state law, commonly one-third or one-half of the estate, regardless of what the deceased spouse's will provides.
Also, homestead (residence) laws may prevent the removal of a surviving spouse from the family home. However, spouses may voluntarily waive these marital rights in many jurisdictions, if done before the marriage ceremony. The court with jurisdiction over the distribution of the deceased spouse's estate will make the final decision. To ensure compliance with local law, the couple may want a lawyer to review such provisions in the Prenuptial Agreement. The provisions of the Prenuptial Agreement may also need to be reviewed by an attorney if the parties change their state of residence.
Distribution Other Than Spouse
The parties may not want their respective estates to pass to the surviving spouse. For example, each party may want to provide for his or her children or grandchildren from a prior marriage.
Even if the parties agree that the bulk of their property should be distributed to someone other than the surviving spouse, they may want certain items to pass to the surviving spouse; for example, the home and its contents.
Another option is to allow the parties to make distributions to each other by the Last Will and Testament of each.
Revocation of Prenuptial Agreement
A revocation provision should be included in the Prenuptial Agreement specifying that the agreement can only be revoked (or canceled) by the parties who are signing and recording a revocation. By requiring that the revocation be recorded in the county records, other parties who deal with the couple can determine whether or not the agreement is still in force.
Additional Instruments
To accomplish the intentions of the Prenuptial Agreement at some time after the marriage ceremony, it may be necessary for one spouse to sign a document giving up all of their rights in the property of the other spouse or confirming that they claim no such rights. In some instances, a third party may require the signature of the non-owning spouse to assure that the non-owning spouse will not assert any ownership rights in the transferred property. For example, a lawyer for a real estate purchaser, who is buying property owned by just one spouse, may require proof that the other spouse has no ownership interest in the property. The non-owning spouse agrees to sign such documents for the sole purpose of confirming that they have no ownership interest in the property.
Alternative Dispute Resolution
Both mediation and arbitration are forms of Alternative Dispute Resolution (ADR) and offer an alternative to going to court should a conflict arise. Both involve an unbiased third party (mediator or arbitrator) who helps with negotiations in an effort to come to a resolution. The main difference between the two is that an arbitrator makes a final and binding decision (just as if a judge had decided the case), while a mediator structures negotiations so that the parties can come to a compromise and settle the matter with each other. Note that by selecting arbitration as a dispute resolution method, the parties are waiving their right to bring the issue or dispute to court and agree to accept the arbitrator's decision as final and legally binding.
Disclosure
The parties to a Prenuptial Agreement have an obligation to fully disclose to each other their respective financial circumstances. By signing the agreement, each party gives up certain rights that they would otherwise be entitled to regarding the property of the other spouse. Therefore, unless that party is fully aware of what they are giving up, the agreement may not be binding because it was entered into under false pretenses.
Take great care to accurately describe the value of all assets, liabilities, and income. This information will appear on exhibits to the agreement which should be signed as "accurate" by the information provider and signed as "received" by the other party.
Miscellaneous Provisions
Despite the growing use of Prenuptial Agreements, there remain some uncertainties regarding the enforceability of various provisions contained in such agreements. Therefore, many Prenuptial Agreements include provisions to bolster the enforceability of the agreement, including the following: (i) the agreement will be binding on both the parties and their representatives, (ii) the agreement is the complete agreement of the parties, (iii) any provisions which may be found to be unenforceable will be limited or deleted so that the remainder of the agreement remains enforceable; and (iv) the parties acknowledge that they have been advised to separately consult their attorney before signing.
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Definitions of Prenuptial Agreement Terms
Term
Definition
Disclosure
The obligation of each party to the Prenuptial Agreement to fully disclose, or reveal, to each other their respective financial situations.
Disinheritance
Disinheriting means depriving another person of property that would have been distributed to that person under the state laws of distribution.
Exhibit
An Exhibit is a document that can be used to provide information which, because of its length or format, is best handled as one or more separate pages attached to the main document. For example: a legal description of property, a pre-printed job description, or a table consisting of rows and columns of information.
Recitals
Recitals describe background information regarding the parties and the reasons for entering the agreement. This explanatory information often assists in the interpretation of the agreement.
Prenuptial Agreement FAQs
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Who needs a prenup?
If you ask your accountant or lawyer, they'd both likely say everyone. If you ask a family member or friend, you might hear a different answer. If you ask someone who has experienced a difficult divorce, they will likely say everyone, as well. Many people have opinions about prenups but ultimately, it is up to you and your future spouse to decide if your marriage will benefit from having a Prenuptial Agreement.
Nowadays, financially responsible partners consider establishing a Prenuptial Agreement before any marriage. This is especially true of those entering a second or third marriage. A well thought out prenup can protect both spouses and their children.
Here are some common reasons people choose to enter a Prenuptial Agreement:
- To protect the inheritance rights of children from a previous marriage.
- To protect business interests, especially if you own a company with others.
- One partner is choosing to relinquish their career and needs to be protected if the marriage dissolves.
- In some states, spousal support amounts can be outlined in the agreement.
- To protect pensions or retirements earned before the marriage.
- To protect family-owned properties such as an inherited home.
- To separate debt obligations acquired after the marriage.
- To shelter one person from the debt the other accumulated before marriage.
- They want to decide what happens after a divorce rather than being subject to default state divorce laws.
- To establish agreements amicably and fairly while relations are supportive and positive.
- Net worth or earning potential vary greatly between the spouses and they want to build fair financial protections for both.
- There is a large age difference between the partners and the older person's retirement and long-term healthcare requirements need to be protected.
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When should I use a Prenuptial Agreement?
Prenuptial Agreements are two-sided contracts signed before a couple is married. It outlines each spouse's assets and debts, and expected future assets and debts, and how they will be managed if the partners choose to part ways, voluntarily or by death.
Prenups are most commonly used when:
- You are contemplating marriage and wish to explain the rights and obligations of each person regarding property.
- You own significant amounts of property.
- You have previously been married.
- You have children from a prior marriage.
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What financial information is included in a prenup?
While some young couples have not yet accumulated a lot of assets and debt, many couples these days do. Statistics are even showing that since millennials are getting married older than previous generations, they have more to bring to the marriage than they would have if they married ten years younger. Some unmarried people have spent a lot of time building their own business, assets and retirement accounts, and some have also amassed a volume of debt such as student loans, credit card debt, mortgages or tax debt. Whether assets or debt, all clean or dirty financial laundry will need to be aired to create a comprehensive Prenuptial Agreement. Even if you have an asset such as a pension that you plan on retaining for yourself, you still need to reveal that it exists. It is also smart to view and share your current credit reports to ensure that you are not missing a debt and can see what each other's credit worthiness currently is.
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What are the requirements for a valid Prenuptial Agreement?
Prenuptial Agreements must be in writing to be legally valid. Additional requirements for valid Prenuptial Agreements include:
- Both parties must voluntarily execute the agreement.
- Both parties must engage in full disclosure of their respective situations at the time the document is executed.
- The agreement cannot be unreasonably unfair to one of the parties.
- Both parties must sign the document in the presence of a notary public.
- The agreement cannot be unreasonably unfair to one of the parties.
Create and customize your own Rocket Lawyer Prenuptial Agreement online, consult with a Rocket Lawyer network attorney if you have questions about your agreement or need specific legal advice, and securely eSign the document at any time and on any device.
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What happens if I don’t sign a prenup?
An unsigned prenup is not legally binding and is not likely to be enforceable, even if there was some verbal agreement to back it up.
If you did not sign a prenup before getting married, you can resume the conversation after marriage using a Postnuptial Agreement instead.
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What are the limitations of using Premarital Agreements?
State laws control what is enforceable in a Prenuptial Agreement. If you need to know what restrictions your state may impose, you can ask a lawyer.
Here are some agreements that your state may not support:
- Parental rights. Prenuptial Agreements cannot protect or enforce parental rights. If you decide to divorce and have mutual children, you will need to go through mediation and or court to decide custody arrangements.
- Maintenance waivers. In some cases, a prenup may not support the waiving of maintenance (alimony and palimony) payments. While that information can be included in the agreement, the court may review the maintenance at the time of divorce and change the amount if they feel the waiver is unfair.
- Incentives for divorce. Judges may look for provisions in the agreement that appear to provide monetary incentives for divorce.
- Non-financial agreements. Most judges do not want to see personal information such as who you are to spend holidays with in a Prenuptial Agreement. You can make those agreements in a separate document if needed.
- Signing under duress. If the judge deems that either party appeared to sign under pressure, they may choose to not support the agreement and divide assets according to applicable state laws. For this reason, most lawyers suggest that the document is signed well in advance of the wedding.
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Does a prenup protect against or prevent having to pay alimony?
A couple may agree to waive spousal support, also known as alimony, in their Prenuptial Agreement in the event of a divorce. Couples may also agree to provide spousal support, including any details, such as a schedule, should the marriage end up in divorce.
Ultimately, if the matter comes before a judge, the judge may not only look at the terms of the Prenuptial Agreement, but may also look at the circumstances of the two parties to the agreement to determine what was agreed to, whether the agreement is valid, and whether or not enforcing it results in an unfair outcome for either of the parties.
State laws may differ on the validity of prenups and the individual circumstances of each couple can impact the terms of the agreement. Making a customized Prenuptial Agreement can save time and money, but if your situation is complex, such as a second marriage, you may want to consider having a Rocket Lawyer network attorney review your prenup at an affordable rate.
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Why is it important to discuss financial matters before getting married?
There is a bit of taboo-type thinking surrounding the idea of asking for a Prenuptial Agreement. However, even if you do not compose a formal document, you need to be able to openly talk about finances and not just the fun stuff like the idea of buying a house someday, but also the hard stuff like how much debt you have, your credit rating and financial obligations to others (like child support or elderly care). Many marital disputes arise from money issues. It is beneficial if you and your partner can willingly and rationally discuss finances before problems arise.
Your marriage may be the most important legal partnership you'll ever enter. Like business partners, you will have responsibilities, contributions, assets and debts, skills and talents, and more you are bringing to the relationship. And together your goal is to stay in business and be solvent. Solvent for both partners, whether together or not. You've already established your love and commitment to one another, the next step may be to decide how best to manage your financial future.
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Can we sign a prenup after the wedding?
While it is not common, yes, you can sign an agreement after the wedding. These are often called Postnuptial Agreements.
In fact, you can make a financial agreement any time during your marriage. Most couples sign their agreement before the wedding since everyone is on good terms and excited about taking the next big step in their life. Even if you have a prenup in place before the wedding, you will need to alter it periodically as your financial situation changes or if you make large purchases.
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Do I need a Prenuptial Agreement lawyer?
Whether or not you should hire a Prenuptial Agreement lawyer may depend on the laws of your state (some states may require both parties have a lawyer review their prenup) and your own comfort level with the details of the agreement itself. If your state’s laws for property division after a divorce are in line with what you’d want anyway, then you might decide that a prenup is not necessary.
In some situations, it might be a good idea for each person to have their own lawyer who can review the prenup with an eye towards their own client’s interests, rather than having a seeming conflict of interest because they are representing both clients at the same time. Having a dedicated lawyer for each person makes the agreement stronger since neither party can later claim they lacked independent advice before signing the agreement.
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What other legal documents might be helpful?
When you get married, you'll want to take the time to update your Will, if you have one. You might also consider adding a Living Will or Power of Attorney.
- Last Will and Testament. Any time your family or your assets change, you'll want to update your Last Will and Testament.
- Power of Attorney. Using a Power of Attorney document, you can appoint someone to manage your personal and business responsibilities if you are away or incapacitated.
- Living Will. A Living Will allows you to appoint someone to carry out your end-of-life wishes.
We also provide documents for your marriage celebration, such as service contracts for caterers, bartenders, musicians, DJs, limousine services and venue rentals.
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