A prenuptial agreement, commonly referred to as a “prenup,” is a document that divides and apportions assets and debts in the event of divorce. In prior years, prenups were common mostly among the very wealthy, but the economic – and social – stigmas associated with them have largely disappeared. Nowadays, couples of all economic levels may find prenups helpful.
What can prenups do?
Prenups can shield assets from equitable distribution during a divorce proceeding. That is the most common use for them, in fact. Prenuptial agreements can, for example, set aside assets for children from a previous relationship. They can also keep debts apart from the marital estate, determine “custody” of four-legged friends, and protect family heirlooms.
These agreements can establish financial obligations during the marriage. For example, a prenup might state that one party (usually the higher-earning spouse) covers certain household expenses, or that one party contribute funds to a joint IRA account.
Do prenups have any limitations?
Prenuptial agreements are very versatile and useful, but there are still some limitations. They cannot contract away child support obligations, determine child custody or (generally) waive alimony. In addition, they can’t be used for any illegal or illicit purposes, nor can they generally dictate personal behaviors of the parties. Such “lifestyle” provisions as delineating how much weight one spouse can gain, or that the couple will have a minimum of two children are often struck down, and they could lead a court to void an entire agreement.
Prenups can make the divorce process go smoother by removing some of the contention around the property and debt division determinations.