How Prenuptial Agreements Work

A popular misconception is that prenuptial arrangements are only for the wealthy. Anyone who has personal assets, liabilities or property -- or children from a previous marriage -- should consider a prenup.

A prenuptial agreement can clarify the financial rights and responsibilities of each party during the marriage and the distribution of property in the case of divorce or death. Prenups can protect spouses from each other's debts. They can also spell out how one spouse's property can be passed on to children from a previous marriage. In addition, a prenuptial agreement can indicate whether one of the parties is to receive alimony.

What the prenuptial arrangement cannot cover is anything illegal. Nor can the prenup have a provision that goes against public policy. For example, future child custody rights cannot be arranged in the agreement. States consider the welfare of children a matter of public policy to be decided by the courts when a marriage ends.

Many experts believe that prenuptial agreements should be confined to financial issues. They suggest that nonfinancial matters, such as household and child-care responsibilities, be handled in other ways.

Usually, prenuptial agreements involve a time element. Most become effective on the day of the wedding and last indefinitely. For various reasons, some are designed to go into effect after a certain number of years have passed. Others contain a provision to end after the couple has been married a specified period of time.

Discuss the possibility of a prenuptial arrangement well before the wedding. Unromantic as the subject is, it's important to remember that finances are an integral part of the marriage partnership. Discussing these matters before you take your vows may prevent problems from developing later.

In addition to allowing sufficient time for planning, another basic rule in preparing a prenup is to be truthful about your financial situation. If one person hides something, this omission can make the agreement invalid. Be frank and honest -- in discussing not just your finances but what you want out of a prenuptial agreement. Both parties need to agree on the goals of the prenup.

Here is a checklist to help in planning a prenuptial agreement:

After these issues have been discussed, you then are ready to prepare the prenup. You'll have to decide whether to draw up the prenuptial agreement yourselves or to seek legal assistance.

To find out how preparing a prenup can be like writing your own vows, read on.

Just as not everyone wants to promise to love, honor and obey, some engaged couples want to prepare their own prenuptial agreement. Books and online sources can provide information and forms to use. Doing it yourself is certainly the least expensive method. But be sure today's savings don't turn into tomorrow's financial disaster. Experts usually recommend that you consult an attorney to prepare the document. In fact, many experts believe that each party needs a separate attorney.

The attorneys you consult should practice matrimonial or family law. They should be familiar with prenuptial agreements and knowledgeable about the laws of the state in which you will live after your marriage. The attorneys co-write the document, keeping their clients' best interests in mind. This arrangement helps to make the prenup fair to both parties. It also helps to ensure that the document will be valid and enforceable in court, should it be necessary to invoke the prenup. Of course, hiring attorneys is more costly than preparing it yourself.

Prenuptial agreements are recognized as legally binding documents throughout the United States. However, you should check to determine whether you live in a community property state. In these states, the law considers assets acquired during a marriage to be jointly owned and under most circumstances requires them to be equally distributed when a marriage ends.

To be considered valid and enforceable, a prenuptial agreement must

A judge has the power to rule that the agreement is not valid if it fails to meet any of these criteria.

If you would like to know more about the legal aspects of prenuptial agreements, you can follow the links on the next page.