Are you thinking about “tying the knot” soon with the love of your life, but are a little hesitant of what this union might mean to you financially? Does the idea of losing half or more of what you have worked for in a future divorce make you cringe just a bit? If so, you are certainly not alone; this is why many new couples may benefit from a prenuptial agreement form. In this article, we will briefly define the prenuptial agreement and show you what items you should definitely think about including on any prenuptial agreement form.
What Is a Prenuptial Agreement and Why Do Some People Use Them?
Prior to marriage, an individual’s finances, including assets and liabilities, are considered theirs and theirs alone, but once two individuals enter into a legal marriage those finances become legally comingled. This is true throughout the marriage, and in the unfortunate event that these two people decide to divorce, all assets and liabilities will typically be broken down and distributed evenly, despite the financial situation that one or the other of the two parties were in when they entered the marriage. Here’s an exaggerated example: Suppose Tom—a multi-millionaire with three properties—decided to marry Sue—a student with no assets to speak of at the time of the marriage. Once the marriage becomes legal, Tom’s and Sue’s assets, including the property, now belong to each of them equally under the law. This is true even if they decide to divorce, despite the fact that Sue entered into the marriage with practically nothing.
What Tom could have done to avoid losing what was legally his prior to the marriage, was entered into a prenuptial agreement with Sue, before he walked to the altar. These types of forms list the assets and liabilities of each party prior to the marriage, and when the agreement is signed by both parties, it serves as a legal document, clarifying that any assets acquired prior to the marriage will not be dually owned once the marriage has taken place. In other words, what you brought into the marriage remains legally yours and yours alone should that marriage end in divorce.
What Should Be Included on a Prenuptial Agreement Form?
Not every prenuptial agreement form is the same, largely because every situation is different, but generally, the following information should be included:
• The assets, liabilities (debts), and property rights of each party prior to the marriage.
• Specific language that stipulates exactly how those assets and debt will be distributed in the event of a divorce.
• An agreement on how property and property rights will be divided should the marriage end.
• A written agreement that clarifies spousal support responsibility in the event of a divorce.
• An agreement between both parties on how their estate will be handled should one of them die during the course of the marriage.
• Stipulations on how children of previous marriages will be protected and provided for in the event of death or divorce.
Again, not all prenuptial agreement forms are identical, and they can easily be constructed and/or manipulated to suit your unique situation. However, without a prenuptial agreement, it is important to know that you may be financially vulnerable in the event of death or divorce, regardless of your financial picture prior to the marriage.