Last updated October 25, 2022
What is a Prenuptial Agreement (Prenup)?
A Prenuptial Agreement, commonly called a prenup, is a domestic contract that you and your future spouse create before getting legally married. It’s important to note that you cannot make a prenup after marriage. A prenup sets out the current and future financial responsibilities of each partner if they separate, divorce, or when one partner dies.
People use a prenup to clarify the property, assets, and debts that are separately owned or shared during and after marriage. This may be the case when each spouse believes they’ve worked hard to accumulate wealth before meeting their partner, and they want the division of property to be fair if the relationship ends.
A Prenuptial Agreement is also known as a/an:
For unmarried couples who want to protect individual assets, a Cohabitation Agreement, also known as a Common-Law Partner Agreement, serves a similar purpose to a prenup.
What does a Prenuptial Agreement cover?
A Prenuptial Agreement generally covers how to divide an estate after a marriage ends by identifying shared and separate property.
The terms covered in LawDepot’s Prenuptial Agreement template are as follows:
1. Party details
Include the full names and home addresses of each spouse entering into the agreement.
2. Separate and shared assets
Each spouse may specify the assets that they will retain ownership rights to in the event of a breakup. These assets are known as separate property. In most cases, the spouse with ownership rights keeps these assets if the relationship ends.
However, a spouse may have to reimburse the other if the value of an asset increases during their marriage. For example, say you identify a sports car as a separate asset and the car increases in value during the years you’re married. A court may rule that your spouse is entitled to the dollar amount that the car increased in value, especially if they contributed to the asset’s appreciation.
Any assets that you list as shared property in your prenup will be divided equally in the event of a breakup (unless the spouses agree otherwise).
3. Separate and joint debt
If one spouse accumulated debt before the marriage, they can claim sole responsibility for repaying this debt in the prenup. You may wish to keep debts separate to avoid burdening each other with unpaid expenses.
If you have joint debt, you may wish to specify how much each spouse is responsible for in the event of a breakup. Typically, joint debts are split evenly between partners. However, you can use a prenup to allocate more or less debt to one partner over the other.
4. Children
A prenup cannot include terms regarding child custody, child visitation, or child support for existing or future children.
However, if you have children, you should list them in your Prenuptial Agreement. This is because children can have rights (such as the right to inheritance) that can impact how courts enforce your prenup in the future.
5. Spousal support
Addressing spousal support (also called alimony or spousal maintenance) in your Prenuptial Agreement is optional. Consider the following factors when determining support payments:
- Which spouse will pay support to the other
- The specific amount to be paid
- The frequency of payments (e.g., weekly or monthly)
- The payment method (e.g., e-transfers)
- Any conditions on the support payments (e.g., a spouse is entitled to support payments if the marriage lasts for at least five years; support payments may end if there is a change in income)
If you don’t specify a spousal support plan, courts will determine payments according to state and federal laws. They will also consider the varying circumstances at the time of the divorce.
6. Inheritance rights
Once married, your spouse typically becomes entitled to half of your estate. However, you can use a prenup to limit their inheritance rights if you wish to distribute a certain amount to another party, such as other family members, children, or a charitable organization. Some people also choose to restrict their spouse’s inheritance if they believe the surviving spouse will be financially secure without it.
Note that a probate court will typically uphold a Prenuptial Agreement, especially if the terms are consistent with terms in the deceased’s Last Will and Testament.
Why should I use a Prenuptial Agreement?
Some people may feel reluctant to sign a Prenuptial Agreement because of the stigma associated with it. However, you don’t need to look at this domestic contract as a relationship red flag.
In fact, a notable benefit of creating a prenup is that it initiates an honest conversation about your financial situation before marriage. For instance, you might be surprised or offended to find that you’re partially responsible for paying off a large debt that your spouse kept hidden from you when you were engaged.
There are many situations for a couple to create a Prenuptial Agreement, such as when:
- You have children from a previous relationship
- You have significant personal assets that you wish to keep separate
- You have sizeable investments in a business
- You want to avoid any conflict or confusion in the event of a divorce, separation, or the death of a spouse
While a prenup protects the individual assets that a person worked hard to earn, it doesn’t mean that you won’t have shared assets as a couple. You can continue to build a life with your partner while using a prenup to protect both of your best interests.
If you don’t create a Prenuptial Agreement and your relationship dissolves, courts will divide marital property according to your state’s laws.
Can a Prenuptial Agreement be voided?
When executed properly, a Prenuptial Agreement is a legally binding contract. However, a court may rule that the contract (or a part of it) is void if one party can prove that the agreement is unfair or illegal.
For instance, a Prenuptial Agreement may be void or voidable if:
- There was a failure to disclose all assets
- There is evidence of fraud
- There is evidence of duress (i.e., an action that forces another person to comply with the agreement) or unfairness
- It was signed involuntarily
- It includes content that is illegal or against public policy
- It includes content that is perceived to promote divorce or separation
To avoid arguments over unfairness, duress, or fraud, each party in the Prenuptial Agreement should seek independent legal advice. Getting your contract reviewed by a lawyer helps ensure its enforceability in the future.
Does a Prenup need to be notarized?
Prenuptial agreements normally do not require notarization. However, notarization helps to verify the validity of a document. As such, notarizing your prenup will help prove the document's authenticity and legitimacy if it is ever brought up in court. You and your spouse can notarize your prenup quickly by using an online notary.