While a prenuptial agreement has historically endured a largely negative reputation, couples in recent decades have increasingly seen the value of the document. This type of marital contract allows both individuals to clearly state which assets or debts they bring into the marriage. Whether this is personal wealth, a business or assets from a previous marriage it is wise to detail them in the prenuptial agreement.
The prenuptial contract, often simply referred to as a prenup, is a beneficial document that lists assets and debts that could be clouded over as the years or decades of a marriage march on. With the prenup in place, the couple will likely spend less time arguing about who owns what non-marital property.
Benefits of a prenup
In general, the prenuptial agreement allows both parties in the relationship to clearly stipulate the assets they own prior to getting married. Having a comprehensive document in place can streamline the negotiations tied to property division in the divorce process. These negotiations will likely turn more efficient as the marital contract will remove any questions or fog of memory when establishing who should retain the rights of ownership of numerous assets, real property or business holdings.
For those couples who own complex assets such as vacation properties, numerous businesses (both online and brick-and-mortar), art collections, jewelry collections and recreational vehicles, the prenuptial agreement can lend clarity to the proceedings. Additionally, intangible financial assets such as retirement accounts, stock options and deferred compensation can be clearly listed in the prenup improving the efficiency of the divorce process.
Limitations of a prenup
Prior to marriage, the couple might choose to aggressively create a comprehensive prenuptial agreement. They might include provisions that center on visitation, child support, spousal support or lifestyle agreements. The court will likely invalidate these provisions and require the couple to redraft their agreement.
Challenges to a prenup
One party could challenge the validity of a prenuptial agreement on many fronts including:
- One party signed the agreement under duress
- One party withheld information from the other
- The agreement contains fraudulent statements
In recent decades, couples have started to recognize the benefits of drafting a detailed prenuptial agreement. If divorce becomes a reality, the couple must navigate numerous negotiations based on property division, determining debt responsibility and a parenting plan.