A prenuptial agreement, or a prenup as it is sometimes colloquially called, is a written contract between two people that outlines their assets and debts prior to their marriage. When considering what is a prenuptial agreement, you may understand this legally binding contract as an inventory of what property each person owns and is bringing into the union as well as what debts are owed by each soon-to-be spouse.
Also when considering what is a prenup, you should realize that this type of prenuptial arrangement is not reserved solely for wealthy individuals. Prenuptial agreements are becoming more commonplace among people of all income levels because they are viewed as monetary and property safeguards.
In fact, the prenup meaning implies that the contract is drafted and implemented prior to marriage. A contract that is drawn up and implemented during the marriage is called a postnuptial agreement.
A postnuptial agreement has significance in a marriage because it clearly defines the money and assets that a married couple acquires together. However, when it comes to answering fully what is a prenuptial agreement, most people choose to keep their prenup in place and utilize it along with rather than in place of their post-nuptial contract.
Alternatively, couples who do not get married but rather choose to live together may want to draft and utilize a cohabitation agreement. This agreement is not a prenup or postnuptial agreement in that it lists the property and money that each person brings to the union. It can stipulate ownership and rights to a property like:
- bank accounts
- retirement investments
- furniture, cars, jewelry, and other valuables
- livestock or farm equipment
Also like a prenup or post-nuptial agreement, a cohabitation agreement is legally binding and can be filed with the local family court. It may then be referred to if or when the couple separates and has disputes about what property belongs to each individual.
The question of what is a prenup may come into play after you get engaged and plan on marrying. You can decide if a prenuptial agreement is a right choice for you and your intended spouse by learning how they are created and what legally binding implications they can have if you decide to end your marriage.
Reasons for a Prenuptial Agreement
The prenup meaning of this type of arrangement defines what property belongs to you and what property belongs to your intended spouse before and during the marriage. Unlike a post-nuptial agreement, a prenup will clearly outline what money and assets you are bringing into the marriage and what ones belong rightfully to your spouse before and after you exchange vows.
You may not believe that this definition is important if you are getting married for the first time. In fact, you may not even own that much property that you would care to keep if the marriage does not last.
However, people who have been married and divorced or widowed may have significant reasons to protect their assets before remarrying. For example, if you have inherited property that you want to pass onto your children from a deceased spouse, you may not want to lose it in a divorce. To protect your deceased spouse’s property and your children’s future inheritance, you need to stipulate ownership of it in a prenuptial agreement.
Likewise, you may want to clarify your financial rights after you get married. Without a prenuptial agreement, your spouse could lay claim to your financial assets and even say that they belonged to him or her. A prenuptial agreement will let you prove and retain ownership of these funds.
Alternatively, a prenuptial agreement can protect you from having to take on debts that are not yours. States view married couples as a single entity and one that shares ownership of both assets and debts accrued during the union.
If your spouse’s premarital debts are substantial, you may want to avoid taking responsibility for them if the marriage breaks up by insisting on a prenuptial agreement. This contract would signal to the judge that you do not own the debts and should not legally have to pay on them.
Finally, prenups save you from lengthy and expensive court battles over property that rightfully belongs to you. The judge will know who gets what and what property or money should be divided equally. Without it, the judge would have to follow the communal rights laws of the state and possibly split up assets that you are entitled to and brought into the union.
As important as this agreement can be to you and your finances, you may wonder how you can create one prior to getting married. You have draft one yourself by using online resources on do-it-yourself legal websites. However, when you want one that will stand up in court and abides by your state’s family laws, you should retain a lawyer who specializes in family and divorce law as well as the creation and implementation of prenups.
Creating a Legally Binding Prenuptial Agreement
It may be in your own best interests to hire a lawyer who does not already represent your intended spouse or anyone in this person’s family. In fact, you and your soon-to-be spouse should retain separate counsel so that you both get objective and reliable advice during the process.
With a lawyer on retainer, you should then be prepared to divulge all of the assets, income, and debts that you want protected by this agreement. You should include assets like:
- homes or businesses
- real estate
- investments like your 401k or IRA
- life insurance
- livestock or show animals
- farm equipment like combines or tractors
- vacation properties
- jewelry and collectibles
Similarly, you should list debts that your spouse will not legally be expected to pay if you divorce. This debts can include:
- student loans
- credit card bills
- medical expenses
- past due taxes
With all of these assets and debts outlined, you take the necessary precautions to protect your finances and show consideration for the finances of your spouse. You also save yourself time and energy if you have to go to court to dispute ownership of assets if your marriage does not last.
Finding the Best Attorney
You do not want to entrust the creation of this agreement to just any random lawyer. You want one who is experienced, licensed, and ready to help you protect what is rightfully yours before you get married.
With that, you should shop around online or by asking your friends and relatives for advice about what lawyer to hire. Once you compile a list of possible attorney candidates, you should then make up a list of what questions you want to ask each one during your initial meeting with them.
Some of the best questions to pose to an attorney who practices in this area of law include:
- How long have you practiced divorce or prenuptial law?
- What law school did you attend?
- What strategies will you use to help me create a litigation-proof contract?
- How many clients like me have you helped in the past?
You also want to find out how much the lawyer charges per hour and what this person’s retainer fee is. You likewise may want to ask about how your lawyer will communicate with you as he or she drafts a prenuptial agreement for you. These considerations should come into play to help you find and retain a lawyer who will act in your best financial and legal interests.
A prenuptial agreement is not just for the rich and famous. These contracts increasingly are being used by everyday people who want to protect their money and assets prior to getting married.
Most states utilize communal property laws that require courts to divide marital property evenly between two divorcing spouses. If you fail to stipulate what property and money you bring into the union, you stand to lose assets that you rightfully own if your marriage ends in divorce.
Rather than jeopardize property that you have inherited or plan to pass down to your children as well as money that you invested and earned before you got married, you can protect all of these possessions with a written contract. Prenups spare couples from losing assets that are theirs alone and also help them avoid taking on debts that do not belong to them.
Creating one of these agreements may not be as easy as it seems. This contract is legally binding and can determine your financial future if your marriage ends. Because you have so much riding on its integrity and structure, you need a skilled lawyer to draft and implement one for you.
Many couples are tempted to save money and retain the same lawyer for their prenups. However, divorce and legal experts warn against this practice. You need objective and focused counsel who will represent you and your best interests alone. You can find such a lawyer by asking friends and family members for input and also by knowing what questions to ask during your initial consultation with each lawyer that you want to interview.