Solid financial planning requires that you make smart decisions about your finances. For some couples, this means reaching a financial agreement about your assets, debts and other obligations. This can be done by a prenuptial agreement, which occurs prior to a marriage. A postnuptial agreement is entered into after the marriage has taken place. In either, both spouses determine the contents of the agreement and agree to the terms. This can help in the event of a divorce.
A prenuptial agreement is a contract you enter into before a marriage. The purpose of it is to make sure that you and your spouse start the marriage with a clear understanding as to the division of assets in the event of death or divorce. The terms of a prenup can vary, depending on your mutual wishes. It can cover how to split property purchased during the marriage. It can also cover how to split items you both owned prior to the marriage. Prenups can also decide who will pay specific bills over the course of the marriage.
A postnuptial agreement is a contract you enter into after marriage. The purpose of the agreement is to settle financial and marital issues that are present within the marriage. A postnup can cover current and future debts. It can cover who owns which assets. It can also address smaller issues like the household budget and day-to-day concerns, such as how much time one spouse can devote to hobbies or hanging out with friends. However, it cannot include a waiver of a spouse’s obligation to pay child support.
You and your spouse may start with an oral agreement about finances and other matters, but it’s a good idea to put the agreement in writing. This way, both parties are clear on the terms of the agreement. It also means each party knows what to expect of the other. Of course, a written agreement is easier to enforce than an oral one if a dispute arises in the future. A written agreement clearly shows the wishes of the couple in case one spouse dies.
Martial agreements that involve finances must be based on full disclosure. This means that both you and your spouse must be honest about your assets and debts. This is the only way to arrive at an agreement that is fair to both parties. The law surrounding prenuptial and postnuptial agreements is complicated and the facts of each case are unique. For more detailed, specific information, please contact us.