The Benefits of Prenuptial and Postnuptial Agreements

You may have heard of prenuptial agreements, but what about postnuptial agreements? Both are legal contracts between spouses that outline each spouse’s rights and responsibilities in the event of a divorce or death. While prenuptial agreements are made before marriage, postnuptial agreements are made after marriage.

Prenuptial and postnuptial agreements can be beneficial for many reasons. For instance, you can plan how to treat real estate property that would otherwise be considered marital property by default. Or you can agree that certain marital income will be considered separate, non marital income. 

What is a Prenuptial Agreement?

A prenuptial agreement, also known as a prenup, is a legal contract between two people who are planning to marry. A prenup defines each spouse’s rights and entitlements to their property, income, and other financial interests in the event of a divorce or death. A prenup can protect each spouse’s assets and property and it can determine how the married couple’s joint debts will be divided in the event of a divorce. 

For example, if you buy real estate property during the marriage it would generally be deemed marital property and jointly owned by you and your spouse. Your spouse would very likely have some entitlement to the current fair market value. Under a prenup, however, you and your spouse can agree that your property will be separate and considered non marital, and they could not claim an entitlement to it. 

Even though this can be handled in a separation agreement if your marriage declines, it may be best to agree on what is marital property and what is non marital while you are both still happy instead of later when animosity has built. 

What is a Postnuptial Agreement?

A postnuptial agreement is very similar to a prenup; it is also a legal contract between two spouses that outlines each spouse’s rights and entitlements in the event of a divorce or death. The main difference between a prenup and a postnup is that a postnup is made after marriage, whereas a prenup is made before marriage.

Like prenups, postnups can be beneficial for many reasons. For example, during the marriage, while you and your spouse are happy and getting along you may open a profitable business.  You and your spouse may agree that you will give your spouse a lump sum of $100,000 from your savings account, but none of the profit from a business that you opened during your marriage. Making agreements about how property, income, and assets will be divided between the two in a divorce, prior to a decline in the marriage, can help you avoid a messy, expensive, and hotly contested divorce case that is driven by emotion. 

Prenuptial and postnuptial agreements can be beneficial for many reasons. If you are planning to marry or are already married, consider establishing the terms of a potential divorce while you and your spouse are on good terms. We are happy to discuss it with you and answer any of your questions.