What is a Prenup? A Deep Dive into Prenuptial Agreements
Although prenuptial agreements have become less stigmatized in recent years, there is still some mystery around the notion of establishing one. Common questions among couples include:
- “What is a prenup?”
- “Why should we get one?”
- “What is covered by a prenup, and how long does it last?”
To answer these questions and others, we’re diving deep into the prenuptial agreement, explaining what it is and why you might consider one before marriage.
What is a Prenup?
A prenuptial agreement is an optional contract the engaged couple creates together and signs before their wedding date. While some may see a prenup as a premonition for divorce, it is simply an agreement to establish how all the separate property listed in the contract will be managed within the marriage. It also upholds predetermined property division just in case a divorce occurs. It can even define how separate and marital property should be managed if one spouse passes away.
Prenups should never be one-sided, either. Both parties must agree to the terms and conditions of the agreement before signing.
Who Should Get a Prenup?
Many still believe prenuptial agreements are for rich individuals who enter marriage with significant wealth. It is smart for a wealthy person to consider protecting their assets if the marriage ever falls apart, but those approaching marriage do not need to be wealthy to benefit from a prenup.
The average age of women entering their first marriage is 28, and the average age of men is 29. By the time a person is almost 30, they will likely have several assets or properties to their name. Anyone entering a marital union with any separate property can consider protecting what they have acquired on their own via a prenuptial agreement.
What is Covered in a Prenup?
Prenuptial agreements can include any form of separate property an individual owns or is responsible for before the marriage, including:
- Business ventures
- Children from a previous marriage
- Financial accounts
- Retirement accounts
Prenuptial agreements also allow couples to decide how marital property should be handled within the marriage and divided in case of a divorce.
Why Get a Prenup?
The purpose of the prenup is to clarify the financial rights surrounding each piece of separate property included in the contract. It is your opportunity to establish how you and your spouse will manage financial responsibilities, allocate assets, and divide property in the event of a divorce. It is also your chance to ensure provisions for any children you may have from a previous marriage.