| A premarital agreement, or prenuptial agreement, is a written contract between persons who intend to be married. The agreement defines the property rights of the spouses. There are many reasons to make a premarital agreement. Listed below are some of the most common reasons.
A premarital agreement may be used to limit a spouse's recovery in the event of divorce.
In the absence of a premarital agreement, state law determines how property is divided in a divorce case. In some states, judges have great discretion in deciding how to divide the property. A valid premarital agreement eliminates the judge's discretion by precisely defining the rights of the spouses. For example, if you are more wealthy than the person you intend to marry, you may want a premarital agreement that limits what your spouse can recover in the event of divorce. The agreement may state that your spouse is entitled to a specific dollar amount or a percentage of your post-marriage earnings. If the agreement is upheld in court, your spouse cannot recover more than the amount stated in the agreement.
* Note: A court may refuse to enforce a premarital agreement that limits a spouse's recovery if the court determines that the agreement is grossly unfair. For example, an agreement may not be upheld if it provides no means of support for a spouse.
A premarital agreement may be used to eliminate spousal support in the event of divorce.
A court can order one spouse to pay for the support of the other spouse after a divorce. These payments are called "spousal support" or "alimony." Some states permit spouses to eliminate spousal support in a premarital agreement. If the agreement is upheld, a court cannot order a spouse to pay spousal support.
* Note: Some states prohibit the elimination of spousal support in a premarital agreement. All states prohibit premarital agreements that eliminate child support or define child custody rights.
A premarital agreement may be used to change the legal status of property.
Property acquired by either spouse during marriage is called "marital property" or "community property." If the spouses divorce, a court may divide this property between the spouses. If one spouse dies, the surviving spouse may be entitled to part of the marital or community property. In some cases, property acquired by one spouse before marriage is subject to division. If you want to keep particular property for yourself in the event of divorce, or you want your heirs to inherit the property when you die, you can draft a premarital agreement that designates the property as your "separate property." In addition, you and your spouse can agree that your earnings during marriage are your separate property.
A premarital agreement may be used to protect one spouse from the other spouse's debt.
Creditors may be able to seize the property of one spouse in order to satisfy the debt of the other spouse. If you do not want to be liable for your spouse's debt, you can limit your liability in a premarital agreement.
A premarital agreement may be used to protect the inheritance rights of children or grandchildren from a prior marriage.
In some states, a surviving spouse may be entitled to a large part of a deceased spouse's property, regardless of the terms of the deceased spouse's will. If you have children or grandchildren from a prior marriage, you can protect their inheritance rights by drafting a premarital agreement that limits the rights of your spouse in the event of your death.
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