Prenuptial Agreements - What to Adresss?

Key Points

There are numerous financial assets that should be considered and addressed in a prenuptial agreement.
Spouses often question whether or not their prenuptial agreement will be enforceable. There should be less concern of this as long as the agreement is fair and reasonable for both spouses.

According to the Equality in Marriage Institute, the couple should review the following key areas:

All assets, liabilities and expectations of gifts and inheritances
The disposition of premarital debts (which can be particularly important since many people bring significant student loan debt to the marriage)
The disposition of premarital property as a result of appreciation, gains, income, rentals, dividends and proceeds from the sale in the event of death or divorce
The disposition of the marital residence and secondary homes in the event of death or divorce
The status of gifts, inheritances, and trusts "either spouse receives or benefits from, whether before or after marriage."
The disposition of types of property, whether jointly or individually owned, such as real estate, artwork and jewelry
Alimony, maintenance or spousal support, or a provision for a waiver or property settlement instead of support (to the extent allowable by law)
Decisions on medical, disability, life or long-term care insurance

Some lawyers advise prenuptial agreements in the case of second (or third) marriages between older spouses who have children to whom they wish to leave an estate. Very often, one of the spouses (usually the man) may be older than his new wife, who is virtually certain to outlive him.

In the case of wealthy people, prenuptial agreements join estate planning in the establishment of marital-family trusts used to shelter assets from estate (federal) taxes.

Prenuptial agreements can also be used to provide economic reinforcement to dimensions of the marriage that are not directly economic. For example, a wife may insist that role as stay-at-home mother merits compensation through spousal support for the interruption in her career. However, prenuptial agreements cannot deal with any of the following: custody of the children (including the children’s religion and schooling), visitation, child support, anything illegal (which is true of all contracts); anything "unconscionable"; or anything encouraging divorce.

In general, prenuptial agreements that are "fair and reasonable" will be enforced. Generally, the longer a marriage lasts the harder it becomes to enforce a prenuptial agreement, often because the spouses, like all married couples, taint their assets by commingling them. Couples often do this by accident or design when, for example, a man puts his money in their account and thereby makes it marital property.

Moreover, even with a prenuptial agreement, a husband normally makes some reasonable provision for his second wife in the event of his death because he is not free to leave her penniless and destitute by virtue of a prenuptial agreement in favor of his adult children from a previous marriage.

Information Provided by: Divorce Source, Inc.

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