It might be that you have some idea of what a prenuptial agreement is, but you aren’t sure what it entails or why you should even consider one.
In the past, they had something of a reputation for only being used by the very wealthy, but that’s no longer the case. They also, unfortunately, have something of a reputation for being unromantic. However, in recent years, especially amongst millennials, the stigma around prenuptial agreement has begun to change.
Planning for the end of your marriage before you’ve even tied the knot may not be the most romantic thing to do, but it is wise to safeguard yourself, especially if you have significant assets. Still, prenups aren’t for everyone, but by taking a little time to understand what they are, you can make a more informed decision about whether or not a prenuptial agreement is suitable for you.
What is a Prenuptial Agreement?
A prenuptial agreement, also called a premarital agreement or antenuptial agreement, is a contract between two people before they get married. The purpose of the contract is to define each person’s property and financial rights in the event of a divorce or death. A valid prenuptial contract needs to be in writing and include both parties’ signatures to be enforceable.
Prenuptial agreements are governed by state and federal laws, which vary from state to state. In general, however, the Uniform Premarital Agreement Act (UPAA) provides a framework for creating and enforcing prenuptial agreements.
While prenuptial agreements are not required by law, they can save a lot of time, money, and heartache.
What is Covered by a Prenuptial Agreement?
A prenuptial agreement can cover many things. Couples can choose to include or exclude any number of items, but some common things that are often addressed in prenups include:
Separate Property
Prenuptial agreements can define what is considered to be separate property, which is any property that either party owned prior to the marriage. This can include things like a house, a car, investments, or inheritances.
By defining what is considered to be separate property, such an agreement can help to ensure that this property remains in the owners’ possession in a divorce decree rather than considered marital property.