Glossary: Prenuptial Agreement

A Premarital Agreement is a common legal agreement executed before marriage. A prenuptial agreement establishes the property and financial rights of each spouse in the event of a divorce. Given the fact that half of all marriages end in divorce, this agreement is critical to anyone who has substantial assets or anticipates acquiring them during the marriage.

It’s often wise to at least consider a prenuptial agreement. These agreements are often used to protect the assets of wealthy spouses but can also protect businesses and serve other important functions. Deciding whether to sign a prenuptial agreement can be one of the most difficult decisions faced by persons contemplating marriage.

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A prenuptial agreement is valid and can be enforced as long as it protects both you and your spouse and the agreement was entered into with a full and fair disclosure of all assets by you and your spouse. The agreement must also be executed and acknowledged with the full formality required for a property deed to be recorded.

Prenuptial agreements aren’t just for rich people anymore. Many millennials are insisting on prenuptial agreements for assets other than money. Since many millennials value experiences more than things, these agreements are often written to include intellectual property such as websites and social media empires.

While many people used to view prenuptial agreements as unromantic, insulting and even a deal breaker, some now recognize them as valuable premarital financial and communication tools. The primary function of a prenuptial agreement is to protect the assets and interests of both parties in the event of divorce or death.  They also provide a great opportunity for a couple considering marriage to have a serious, honest discussion about the handling of money including touchy issues such as debt management and control plans for their future together.

Postnuptial agreements have become increasingly popular in recent years. Almost all 50 U.S. states now allow them. In many ways, postnuptial agreements are almost identical to prenups. The biggest difference is that postnuptial agreements are signed after the wedding.

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