Do Prenuptial Agreements Lessen the Financial Risks of Marriage?

By David Montoya

The prenuptial agreement, a legally binding contractual agreement between two people about to enter marriage, outlines the manner of asset distribution at divorce or death. This gives both parties more control over their financial circumstances, since the agreement has authority over pertinent state laws. Despite lessening financial risk through more control over asset distribution, prenuptial agreements have limitations. Contact an attorney for help negotiating and drafting a prenuptial agreement.

Basic Elements

The laws controlling prenuptial agreement formation vary by state, but several baseline requirements exist. Typically, such agreements must be in writing and agreed upon by both parties voluntarily. Additionally, prenuptial agreements must be notarized, require both parties to provide full financial disclosure and cannot include unconscionable or unreasonable terms.

Invalid Agreements

A prenuptial agreement can only reduce financial risk if executed properly. Any defects involving the basic requirements may render the document invalid in family law court. Furthermore, wrongdoing can also invalidate the agreement. This includes fraud, coercion and misrepresentation of facts. If any defect occurs, the court has the authority to invalidate the specific terms containing the defect or the entire agreement itself. After invalidation, state law regains control over property distribution at death or divorce.

Divorce is never easy, but we can help. Learn More

Non-Negotiable Issues

Prenuptial agreements cannot cover every financial matter. In fact, these agreements typically cannot contain terms specifying a spouse's right to child support, visitation or custody. The agreements also cannot contain any illegal terms, financial or otherwise.

Negotiable Issues

Despite several off-limits issues, prenuptial agreements cover a wide range of topics. Both parties can agree to terms covering assets acquired before the marriage, designate responsibility for debt brought into the marriage and waive rights to retirement plans. Prenuptial agreements also allow couples to determine which assets belong to each spouse, determine who pays for certain assets, such as the mortgage, and outline business management responsibilities if a business is brought into the marriage.

Who Needs A Prenuptial Agreement?

Several types of individuals benefit from prenuptial agreements. Individuals with children from a previous marriage, for example, may want assets to pass to them that would otherwise pass to the spouse under state law. Those with valuable assets, or high earning ability, may also consider such agreements to limit spousal support payments, thereby preventing one spouse from making future claims on the other spouse's wealth. Business owners can also draft prenuptial provisions to ensure that a spouse does not retain ownership in the business in case of divorce or death. A person about to marry someone with significant debt can also draft an agreement to ensure no obligation to pay for their future spouse's debts.

Divorce is never easy, but we can help. Learn More
Key Sections of a Partnership Agreement
 

References

Related articles

The Uniform Premarital Agreement Act in Florida

Few couples in Florida get married with the expectation their marriages will end in divorce. Unfortunately, divorce is a common event in this state. As of October of 2008, Florida had the highest number of divorces out of 44 responding states, according to a CDC National Vital Statistics Report. Florida adopted the Uniform Premarital Agreement Act in 2007 to give Florida residents the ability to enter into financial agreements prior to marriage in case their marriages end in divorce. The Act applies to all prenuptial agreements entered into from October 1, 2007.

New Jersey Statutes Limited Liability Company Act

New Jersey permits business owners to form limited liability companies, or LLCs, and any substantive legal issues relating to LLCs are governed by state law. The New Jersey Division of Revenue enforces the laws surrounding the formation and dissolution of LLCs in the state. While many states LLC laws share similarities, certain requirements are unique to New Jersey.

How to Buy a Membership Interest in an Existing LLC

A limited liability company is owned by its members. The unique business structure allows the owners to keep their personal assets from actions by creditors of the LLC. If you want to become part-owner of an existing LLC and share in its profits, you'll need to buy a membership interest. You'll need consent from the current members to buy an interest, and your control over the business might be limited.

Get Divorced Online

Related articles

Can an LLC Borrow Money From Individuals?

A limited liability company is a type of business entity that enjoys many of the same powers and protections of a ...

Cohabitation Laws on Breakups & Assets

Some couples choose cohabitation and decide to live together without marrying. If a couple lives together outside of ...

Can a Limited Partner Make Decisions Binding to the Partnership?

A limited partner can have an ownership stake in a limited partnership or a limited liability partnership. Whether a ...

New York State Divorce Laws on Prenuptial Agreements

Few couples enter into marriage expecting the marriage to fail, but prenuptial agreements are designed to protect both ...

Browse by category
Ready to Begin? GET STARTED