You often hear about married couples signing “prenups” before they tie the knot, but many (including some of the people signing the agreements) do not know exactly what a prenuptial agreement entails and how it may affect your future. A prenuptial agreement typically addresses what will happen in terms of division of assets and spousal support if the couple later separates or divorces, but can include virtually anything the couple wishes to agree to about the future of the marriage.
What Can Be Included in a Prenup?
Couples generally enter prenuptial agreements when one or both parties are bringing significant assets into the marriage. This may include business equity, real property, significant gifts from an estate, or substantial income. The prenup ensures that the parties will maintain the assets they brought into the marriage and that they will not be subject to division in the event of divorce. Other typical clauses in prenups address:
A limitation of spousal support/maintenance (alimony), if any, that will be awarded post-divorce
Limitations on division of assets obtained prior to marriage
Limitations on division of assets obtained during marriage
Choice of law (where litigation, if any, will take place)
Limitations on debt allocation post-divorce
Rights of children from a previous marriage
What should happen to assets in the event of death or incapacitation
You can choose to include an array of provisions in your prenuptial agreement. depending on your personal needs. The best way to ensure that all possible options are considered and included is to consult with an experienced prenuptial agreement attorney before signing the paperwork.
Should I Sign (or Make my Spouse Sign) a Prenup?
Even though prenuptial agreements are historically used for protecting significant assets, any couple, regardless of net worth, should consider entering a prenuptial agreement. When a couple gets married, nearly everything acquired over the course of the marriage is considered marital property, even if the asset or income is only in one spouse’s name (consider: a deed issued to one spouse, income earned by one spouse, individual retirement accounts, stock accounts, or personal property purchased or otherwise acquired). Marital property, without a prenup or agreement otherwise, is divisible upon divorce between both parties. This means that your spouse may be entitled to some of your income, assets, or property after divorce, and that this will be divided “equitably” (fairly) according to your agreement or by the court overseeing your divorce proceedings.
Some people think that signing a prenuptial agreement is setting a marriage up to fail– after all, you are entering a contract to determine what will happen in the event that the marriage does not work out. Others think that a prenuptial agreement signifies a lack of trust between the parties, where one or both parties are worried about losing their assets to their partner in the future, or having a bitter legal battle over who should be entitled to what. In reality, however, a prenuptial agreement is a way of entering your marriage with all of your assets organized, disclosed, and with a clear understanding of what each party is bringing into the marriage. Preparing for worst-case scenarios should not signify a lack of trust in the relationship, but rather, should represent a sound and responsible financial decision to ensure that your future is protected.
Hiring a Prenuptial Agreement Lawyer
Regardless of your income or assets, it is important to consider the implications a prenuptial agreement may have on your future. If you are asked to sign a prenuptial agreement when you are not bringing significant assets into the marriage, or if you have significant assets you wish to be protected in the event of divorce, consulting with a knowledgeable prenuptial agreement attorney is the best course of action. An attorney can explain to you the types of provisions you may include in a prenup, advise you whether other documents should be completed in addition (wills, trusts, etc.), and help you and your future spouse understand what you are signing before you sign it.
To reach out to The Turbo Advocate please call our team at 510-414-8117. We are ready and able to help residents throughout San Francisco and California with your legal needs.