What Does A Prenup Do?
Prenuptial agreements (prenups) are powerful legal tools that help couples define financial arrangements and responsibilities during marriage and in the event of divorce. Here’s everything you need to know about what a prenup can and cannot do.
What Does A Prenup Do?
Prenuptial agreements (prenups) are powerful legal tools that help couples define financial arrangements and responsibilities during marriage and in the event of divorce. Here’s everything you need to know about what a prenup can and cannot do.
A prenup is a private contract between spouses
First and foremost, a prenup is a private contract between spouses that is governed by state law. What a prenup “can do” is within the confines of your state law. In the event of a divorce, a judge takes a look at your prenup and (typically) incorporates the terms into the final divorce judgment, which makes everything official. However, the things that a prenup can “do” are limited by your state law. Most prenups cover property division, spousal support, inheritances, businesses, and estate rights in death. Also, some states have more restrictions on what can go into your prenup than others. And virtually all states say there should not be any matters about children in the prenup, such as child support, visitation, or child custody.
A prenup does what you want it to do
If you only want to address one thing, such as inheritances, then you can ask your attorney to do that! If you want to add things about assets, debt, and inheritances but leave out clauses about pets and infidelity, that’s your right to do so! Remember, this is a private contract that you and your partner may decide the terms to (within the laws of your state). As long as you follow state law and do not include anything against public policy, you can put whatever financial matters (and certain lifestyle matters) that you wish in your prenup!
A prenup can protect:
Protect Assets
The meat and potatoes of a prenup are characterizing assets and outlining how they will be split up. Assets can include real estate, future inheritances, businesses, trusts, bank accounts, retirement funds, and anything else with value. In addition, you can detail what happens if those assets appreciate in value over time or if you exchange the assets for new assets. For example, let’s say you own a house worth $500k at the time of the wedding. During the marriage, it appreciates $300k, and then you sell for $800k and buy a new home with the proceeds. You can make sure the $300k in appreciation and the new home all remain your separate property.
Protect Against Debt
One of the most important things a prenup does is protect against your partner’s debt. Did you know in some states that, any debt incurred by either spouse during the marriage can be subject to a 50-50 division? Yes, even if your name isn’t on the loan itself, you can still be responsible for your spouse’s debt. Scary! With a prenup, you can make sure that doesn’t happen. Whether it’s future potential debt or existing debt, prenups can outline who is responsible for what. This includes student loans, business loans, credit card debt, mortgages, and more.
Protect Pets
Let’s face it. Millennials are treating their pets like their kids and want to protect them just as much as they want to protect a bank account or piece of real estate. And, in many states, pets are still considered property, akin to a piece of furniture or real estate. Many states will turn to adoption papers and contributions to payment of the animal to determine who gets the pet instead of who is the main caregiver or who is more attached to the animal. So, with that said, you can use a prenup to ensure your pets are safe and sound in your arms in any scenario life throws your way!
Protect Assets in Death
Did you know that many states have something known as a “spousal elective share,” which assigns a right to surviving spouses to take a portion of their deceased spouse’s estate…even if they were written out of the will? Let’s envision a scenario where a couple is on their third marriage. They have kids from previous marriages and want to make sure 100% of their assets go to their children if they die, so they make a will stating so. With the states that allow for an elective share right, the surviving spouse can actually renounce the will and grab a portion of their dead spouse’s estate. Crazy, right? With an elective share waiver in a prenup, you can ensure that your spouse waives their right to this “spousal elective share,” and everything goes to your kids!
Prenups do so much more. You can also include the following clauses in your prenup (state law dependent):
- Alternative dispute resolution (such as requiring mediation before filing for divorce through a court)
- Confidentiality (making sure info stays private, even in a divorce)
- Infidelity (in a few states, you may be able to include “no-cheating” clauses)
- Social media (outlining what goes regarding social media use)
- Joint bank accounts (you can include whether or not you will have joint accounts and what expenses and deposits will ebb and flow from said account)
- Taxes (you can work out certain tax matters with a prenup)
- Lump sum payment (you can provide a one-time payment from one spouse to the other in the event of a divorce, which is separate and apart from alimony)
The most important thing to remember is that prenups cannot go against your state laws or public policy. Virtually all state laws say you cannot include child support, child custody, or child visitation schedules in prenups. And even if a state allows you to do so, they always reserve the right to review it and throw it out if it doesn’t make sense to the child.
In some states, prenups cannot talk about things like infidelity, drug use, sexual matters, etc. This is because courts generally do not want to get involved with marital conduct. And, of course, you can’t include crazy things like clauses that require someone to break the law.
FAQs about what a prenup can do
Still have some questions about what a prenup can or cannot do? Let’s discuss.
Can a prenup help people who aren’t wealthy?
Yes, of course. If you have anything you want to protect, whether it’s worth a million dollars or $500, you can protect it with a prenup. Plus, prenups can also help protect you against debt from your partner. And don’t forget about future-you. Your prenup can address the income and assets you acquire in the future, even if you don’t have money now.
Can a prenup determine child custody?
No. Prenups cannot address child custody, as that is a question for a judge at the time of divorce and is done through an analysis of the child’s best interests. This is because what you and your partner put in a prenup years ago may not be what is actually best for the child. The courts want to look at the situation at the time, not what two people contracted to (potentially) years prior.
Can a prenup be found on public record?
Nope! Not usually, at least. Prenups are not required to be filed on public record in order to be enforceable–they’re private contracts. In addition, typically, family courts may scrub your information if your prenup gets litigated so it cannot be searched in court opinion databases.
What’s the main purpose of a prenup?
The main purpose of a prenup is to allow couples to outline their financial rights and obligations of the marriage. Think of it this way: Marriage is a contract you and your spouse “sign” with the government. A prenup overrides that contract, so you can make the rules about your property.
Are prenups enforceable?
Yes! Prenups are able to be enforced as long as you follow the rules laid out by your state.
Have any questions that aren’t mentioned here? We’re happy to chat.
FAQs about what a prenup can do
Still have some questions about what a prenup can or cannot do? Let’s discuss.
Can a prenup help people who aren’t wealthy?
Yes, of course. If you have anything you want to protect, whether it’s worth a million dollars or $500, you can protect it with a prenup. Plus, prenups can also help protect you against debt from your partner. And don’t forget about future-you. Your prenup can address the income and assets you acquire in the future, even if you don’t have money now.
Can a prenup determine child custody?
No. Prenups cannot address child custody, as that is a question for a judge at the time of divorce and is done through an analysis of the child’s best interests. This is because what you and your partner put in a prenup years ago may not be what is actually best for the child. The courts want to look at the situation at the time, not what two people contracted to (potentially) years prior.
Can a prenup be found on public record?
Nope! Not usually, at least. Prenups are not required to be filed on public record in order to be enforceable–they’re private contracts. In addition, typically, family courts may scrub your information if your prenup gets litigated so it cannot be searched in court opinion databases.
What’s the main purpose of a prenup?
The main purpose of a prenup is to allow couples to outline their financial rights and obligations of the marriage. Think of it this way: Marriage is a contract you and your spouse “sign” with the government. A prenup overrides that contract, so you can make the rules about your property.
Are prenups enforceable?
Yes! Prenups are able to be enforced as long as you follow the rules laid out by your state.
Have any questions that aren’t mentioned here? We’re happy to chat.
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