What You Can (and Can’t) Do with a Prenuptial Agreement
A prenuptial agreement is a contract entered into between spouses before marriage that can decide a variety of financial issues. While many people often associate prenups with divorce, they can do much more than determine property distribution in the event your marriage doesn’t work out. For instance, they can clarify financial expectations for the marriage and provide each spouse with peace of mind that their financial interests will be safeguarded. Importantly, prenuptial agreements aren’t only for those with substantial net worth — they are for anyone who wishes to protect the property they are bringing into the marriage and ensure fairness when it comes to sharing assets.
What is a Prenuptial Agreement?
A prenuptial agreement is a contract that is entered into by a couple before they marry that defines each spouse’s financial rights and responsibilities. It typically outlines each person’s debts, assets, and property — and specifies how the couple’s assets should be handled in the event of divorce. Without a valid prenup or other agreement in place, Missouri’s equitable distribution law would apply if a couple chooses to part ways. Significantly, by determining property division issues in advance, spouses can avoid lengthy, costly, and contentious litigation should divorce arise.
In order to be enforceable, a prenup must be signed and in writing. It must also be fair to both parties, and have been entered into freely. In addition, full disclosure must have been made regarding each spouse’s assets. If the agreement is one-sided, was entered into under duress, or a spouse failed to fully disclose their assets, a court may render it invalid and unenforceable.
What Can a Prenuptial Agreement Decide?
A prenuptial agreement can cover a variety of issues related to property, debts, and assets that belong to you or your spouse. Rather than let a judge decide property division matters in your divorce, a prenup allows a couple to reach an agreement about these issues among themselves. Importantly, a prenup can potentially reduce the amount of conflict when it comes to property distribution since it determines these matters before emotions run high. A prenup can also preserve your financial privacy in divorce.
Specifically, a prenup can do the following:
- Delineate what assets will be classified as marital property versus separate property
- Decide how premarital and marital debts will be paid
- Keep a business within the family and separate from the couple’s shared marital assets
- Determine who should get the house in the event of divorce
- Establish whether spousal maintenance will be paid if the spouses divorce
- Decide how death benefits will be divided
- Clarify how each spouse’s inheritance should be handled
- Establish pet custody
A prenuptial agreement can also work alongside an estate plan to define specific property rights. Entering into a prenup can be particularly important for those who have children from a prior marriage and can help ensure they are provided for in the way you wish upon your passing.
Including a Sunset Clause in Your Prenup
Another provision that can be included in a prenup is a “sunset clause.” This is a provision that specifies a time at which the prenup will expire. For instance, a sunset clause might state that the prenup will expire after the couple has been married for 10 or 20 years. Other couples may decide that the sunset clause will terminate the agreement upon the birth of their first child or some other significant event.
When a sunset clause is used, a prenup would no longer be enforceable after the expiration date specified — unless you and your spouse revise the provision or enter into a new agreement. Although you would not be able to execute another prenup, you can enter into a postnuptial agreement at any time during the course of your marriage.
What Can’t You Include in a Prenup?
While a prenuptial agreement can decide many financial matters related to the marriage, it’s crucial to understand that there are certain issues a prenup cannot decide. For instance, as a matter of public policy, a prenup cannot determine things like child custody or child support. A court would decide these matters based on the best interests of the child at the time of divorce.
Any provisions that are unconscionable or provide an incentive for divorce cannot be included in a prenup. In the event the document includes a clause that violates public policy or the law, it cannot be enforced. A court might either strike the unenforceable provision or render the entire document invalid. Prenuptial agreements also cannot include any terms that are unreasonable at the time if signing.
Contact an Experienced Missouri Divorce Attorney
If you and your soon-to-be spouse are considering a prenuptial agreement, it’s vital to have legal counsel by your side to ensure your rights are safeguarded. Divorce and family law attorney Mark A. Wortman provides knowledgeable counsel to clients in the greater Kansas City, Missouri area for drafting, negotiating, and litigating prenuptial agreements — and divorce matters. To schedule a confidential consultation to learn how he can assist you, please contact him today online or by calling (816) 523-6100.