A prenuptial agreement is a legal contract made between two people before they become married. The contract details the property rights of each party, as well as the financial remedies in the event that the couple divorces. Prenuptial agreements are also referred to as “prenups,” “antenuptial agreements,” or in modern cases, “premarital agreements.” Such agreements are designed to protect the property and assets of one or both spouses should the relationship dissolve in the future. To explore this concept, consider the following prenuptial agreement definition.
Origin
1978 First known use of Prenuptial Agreement in the U.S.
Traditionally, prenuptial agreements were made in order to protect a spouse who was exceptionally wealthy. This ensured that the other spouse could not gain a large portion of assets, both owned prior to the marriage, and income earned by those assets throughout the terms of the marriage, in the event of a divorce. Another purpose of a prenuptial agreement is to discourage individuals from marrying someone based solely on his or her wealth. These purposes for prenuptial agreements hold true in modern times, though the ever-increasing divorce rate has given these contracts additional uses, such as:
Each state has specific laws that determine what is, and what is not, considered marital property. Most commonly, any property, financial assets, and debt acquired during the marriage are marital property. Property, financial assets, and debt owned by one party prior to the marriage are non-marital property, remaining his or her separate property. Additionally, anything gifted specifically to one spouse, and inheritances remain the separate property of that spouse.
In the event the couple divorces, and cannot agree how the marital property should be divided, a judge will determine its distribution. It is at this time that a signed prenuptial agreement that specifically defines marital and non-marital property, helps a spouse avoid losing what was his or hers prior to the marriage.
What can and cannot be addressed in a prenuptial agreement often varies depending on the desires of the parties. Commonly, any property or assets purchased jointly are considered marital property and not included in a prenuptial agreement. State laws may also affect exactly what issues may be governed by a prenuptial agreement. Common prenup terms may include:
Any individual seeking to prepare a prenuptial agreement without the assistance of an attorney may find a prenuptial agreement sample to be helpful. Prenuptial agreement samples may be found online, though such samples should only be used as a guide to creating an agreement that is personalized to the specific circumstance. Searching for a prenuptial agreement sample specific to the state in which the marriage is to take place helps ensure necessary provisions are included in the final agreement.
The cons of a prenuptial agreement include:
The inclusion of a sunset provision means that the prenuptial agreement will expire after a certain amount of time, or upon certain life events. For example, in Maine, a statutory sunset provision states that a prenuptial agreement expires automatically upon the birth of a child of the relationship. In some states, sunset provisions ensure the expiration of a prenuptial agreement after the couple has been married a specified period of time, unless the agreement has been renewed. Other states have no statutory reference to sunset provisions, leaving it up to the parties to specifically include one in their prenuptial agreement.
The National Conference of Commissioners on Uniform State Laws enacted the Uniform Agreement Act in 1983. The Act was drawn up in order to govern the provisions of prenuptial agreements. However, not all states adopted the Uniform Agreement Act. As of 2015, only 27 states have adopted the Act, and each has their own versions. These include Arkansas, Connecticut, North Carolina, and Rhode Island.
A postnuptial agreement is created after the marriage takes place, rather than before. This is done to settle the affairs of the couple in the event of a divorce. Like a premarital agreement, a postnuptial agreement addresses financial issues of the couple, specifying how current and future marital property, financial assets, and debts will be dealt with, including day-to-day household budgeting issues. Not all state laws recognize the legality of postnuptial agreements, so it is important for couples to check with the laws of their state to ensure the contract will be enforceable in the event of a divorce.
There have been cases in which a spouse has created a postnuptial agreement with the intent of filing for a divorce shortly afterward. In many jurisdictions, this is considered fraud, and the agreement is not likely to hold up in court. In the 1991 case of Fogg v Fogg, the Supreme Court ruled that a postnuptial agreement created after the wife discovered she would be receiving a large sum of money, with the intent to file divorce immediately after, was invalid. The money would have been considered marital property without the postnuptial agreement, and due to the Supreme Court’s finding that the wife had fraudulent intent, it remained subject to equitable division.
The famous case Bonds v Bonds came about when legendary baseball player Barry Bonds and his wife, Sun, divorced. The couple married in 1988 and, before the marriage took place, a prenuptial agreement was drawn up to protect Bond’s earnings and acquisitions during the marriage. Bonds had an attorney present, but Sun did not, though she signed the agreement. After six years of marriage and birth of two children, the couple divorced.
Sun sued Bonds in an attempt to have the prenuptial agreement overturned by the court, claiming she did not have an attorney present, and didn’t truly understand the agreement’s provisions. The trial court ruled there was no need for an attorney in a prenuptial agreement, so long as it was signed voluntarily. The matter was taken to the California Court of Appeals, which sent the matter back, saying that, where a party is not represented by an attorney, the court should subject the agreement to a higher level of scrutiny.
When the California Supreme Court reviewed the case, it overturned the appeals court ruling, reinstating the trial court’s decision, and the validity of the prenuptial agreement. In this case, Sun had determined that she had no need for an attorney to review the prenuptial agreement, and signed it voluntarily.
Real Property – Land and property attached or fixed directly to the land, including buildings and structures.