Table of Contents
- Free Prenuptial Agreement Template
- The Definition: What is a Prenup, and What Should It Include?
- Prenup Pros and Cons
- Is a Prenuptial Agreement Right for You?
- How to Make Your Prenup Valid
1. Download a Free Prenup Template
2. The Definition: What is a Prenup and What Should It Include?
A prenuptial agreement, or “prenup,” is a written contract that is entered into before a couple gets married, most commonly when they are engaged. This agreement spells out the financial and property rights of each spouse should the marriage end in separation, specifically by death or divorce.
Prenups are also referred to as:
- Antenuptial agreement
- Prenuptial contract
- Domestic contract
- Marriage contract
- Premarital agreement
Prenuptial Agreement Sample PDF
The prenuptial agreement sample below details a contract in which the engaged couple agrees to maintain separate ownership of all property acquired before the marriage. However, all property acquired individually during the marriage will be treated as marital property and owned by both partners.
Prenuptial-Agreement-SampleWhat Should Your Prenup Include?
Separate Property / Non-Marital Property
In the event of a divorce, the court will generally divide marital property between both parties, but exclude assets known as “separate property” or “non-marital property.” This property includes:
- Premarital property (property individually acquired before marriage)
- Any inheritance or gift received from a third party during marriage
- Compensation from most personal injury awards
- Property acquired after separation
However, during marriage, commingling—or mixing—separate property may occur and cause property to lose its separate status. To prevent this, a prenuptial agreement can be used to designate which partner gets what in the event of a divorce, regardless of commingling.
For example:
- If you bought stocks for $100 before getting married and they appreciated to a worth of $1 million later on, that increase in value will be shared by both spouses unless designated as separate property in your prenup.
- If you have $100,000 in pre-existing debt from college or graduate school, a prenup can ensure that the debt belongs only to you and not your spouse, or vice versa.
Marital Property
Anything acquired during marriage by either partner is generally regarded as shared marital property that equally belongs to the other partner. Also known as “community property,” this includes:
- Earnings by each spouse during the marriage
- Property bought using either spouse’s earnings during marriage
- Separate property that has commingled with other marital property (e.g., an individual bank account in which both spouses deposit funds)
However, a prenuptial agreement can be used to exclude certain property from being considered marital property. This is particularly relevant for those residing in a community property state, where all property earned or acquired by either spouse is owned 50/50 (except for property received through gift or inheritance).
Business Ownership
If one spouse began a business prior to getting married, the other spouse may be entitled to 50% of any increased value in the business that occurred during the marriage.
Using a prenup, however, business owners can designate the status of a business owned prior to marriage as separate property. In the event of a divorce then, this agreement would ensure that the business owner possesses exclusive or majority shareholder rights, to the business.
Savings and Retirement Goals
Couples can use prenuptial agreements to make concrete future financial plans together and decide how they will invest, save, or spend their money. For example, each spouse can agree to contribute a certain amount of money into joint bank accounts or determine a regular spending allowance. Similarly, a prenuptial agreement can clarify whether joint household expenses, like a mortgage, will be paid from separate or joint bank accounts.
Alimony and Spousal Support
A prenuptial agreement can explicitly determine that the more disadvantaged partner will or will not receive financial support. State laws, however, vary on whether a spouse can completely waive or give up the right to receive alimony or spousal support.
When determining alimony, a judge and spouse may consider:
- If there is no spousal support, will the spouse become destitute and unable to provide for themselves?
- Does the poorer spouse have limited business experience?
- Did the richer spouse fully disclose all their assets and wealth?
- Did the disadvantaged partner truly understand the rights they were giving up?
Children from a Previous Relationship
If one partner has children from another relationship, a prenup can ensure that separate premarital property is shared with these children. Even when a will exists, prenuptial agreements can clarify and reinforce expectations to avoid costly legal battles that ultimately eat away at the estate.
Note: A prenuptial agreement cannot be used for unborn children from a new marriage.
3. Prenup Pros and Cons
The Pros of Using a Prenup
Practical:
- Serves as a form of marriage insurance
Financial and Property:
- Settle any major financial concerns before the marriage
- Protect your business from being split between you and your ex-spouse
- Prevent you from taking on your spouse’s debt
- Protect your financial and property assets acquired before the marriage
- Help you avoid costly litigation fees in the event of a divorce
Family:
- Help the couple practice communicating and negotiating important issues in the relationship
- Provide for a spouse who is going through college or professional school
- Lay out repercussions if your spouse commits adultery
- Safeguard the inheritance of your children from a previous marriage
The Cons of Using a Prenup
Financial and Property:
- Prevents you from being entitled to a portion of your spouse’s estate or inheritance
- You may not be entitled to a share of the increased value of your spouse’s business even if you helped contribute to that growth
- Cannot anticipate every potential financial issue throughout the marriage and could end up complicating things if circumstances change
Family:
- Can risk damaging the level of trust within the relationship and increase suspicions between the couple
Miscellaneous:
- Depending on the laws of your state, your agreement could still be overturned in court
4. Is a Prenuptial Agreement Right for You?
Perhaps you may be wondering whether to move forward with a prenuptial agreement. Many people mistake the contract as a legal tool for only the wealthy. For example, there was much talk about how the prenup signed by the infamous celebrity couple Khloe Kardashian and Lamar Odom left both parties with their respective fortunes largely intact.
However, you needn’t be rich or famous to benefit from a prenuptial agreement. With a 2016 National Center for Health Statistics study placing the U.S. divorce rate at nearly 50 percent, it’s evident no one is immune from a highly contentious divorce.
I should use a prenup if:
Practical:
- There is a large difference between spouses in wealth or property.
- You were in a previous marriage.
- You are engaged.
- You are a celebrity.
Financial:
- Either you or your spouse have a large amount of personal debt.
- There is a large difference in past or future earnings from your job.
- You have accumulated more than one year’s worth of employment or retirement benefits.
- You want to decide who and how each spouse pays household bills.
Property:
- You own real estate.
- You are the owner or partner of a company, nonprofit, or business.
- You are concerned about how your new marriage interacts with your estate.
Family:
- You have children from another relationship.
- You expect to receive or have already received an inheritance.
- One partner will stay at home and raise children.
- One spouse plans to pursue an advanced degree while the other works.
I shouldn’t use a prenup if:
Practical:
- The prenup is heavily in favor of one party.
- You or your spouse are planning on violating public policy or committing an illegal act.
- You are being coerced into signing it.
- Your lawyer has not looked it over.
- You and your spouse agree with your state’s default divorce law.
Financial and Property:
- Neither spouse has sizable assets.
Family:
- You want to limit future custody and visitation rights of children.
- You want to waive child support.
- You want to waive alimony or spousal maintenance.
For more information, read the following resources:
- 5 Ways a Prenup Can Divorce-Proof Your Marriage
- The Case for the Prenup
- Can I Keep My Engagement Ring?
Do same-sex couples need this document?
After the June 2015 Supreme Court ruling in Obergefell v. Hodges, and the legalization of same-sex marriage nationwide, the IRS weighed in on same-sex marriages for federal tax purposes. According to a 2013 Forbes article, even before the landmark Supreme Court ruling, same-sex couples would have benefitted from a prenuptial agreement.
5. How to Make Your Prenup Valid
When crafting a prenup, there are two goals: a fair process and fair terms. Although courts may take different stances on what is and what isn’t fair, the process by which the prenup is negotiated and the terms of agreement are usually the same in all 50 states.
In order for a prenuptial agreement to be enforceable in court, it must meet five basic procedural requirements:
- Must be in writing
- Must be signed voluntarily (free of duress or undue pressure)
- Must have been signed after full and fair disclosure
- Must not be unconscionable (must be fair and reasonable)
- Must be signed by both individuals before a witness and notary public
To determine the fairness of the terms of a prenup, a court will look at:
- The ability of each spouse to support themselves after divorce or death
- The goals of both parties entering the agreement
- The amount of property and income each spouse owns
- Family obligations and relationships
- Each spouse’s occupation, education, and earning capacity
- Each spouse’s future needs
- Each spouse’s expected contribution to the marriage
- The age and health, emotional and physical, of each spouse
To avoid a legal hassle, your prenup should address the following concerns and issues:
Top 2 Concerns a Prenup Should Address
1. Governing Law
If the prenup is challenged, the default is that the laws of the state where you are getting divorced apply if you meet the state’s residency requirements (i.e., 6 weeks or 6 months), if any. If you want the laws of the state where you were married to apply, you must specify this in your prenup.
2. Sunset Provision
Some couples may agree that the prenuptial agreement should expire after a certain number of years or after a child is born. State laws sometimes enforce “sunset clauses” in divorces between couples married for a short time or with no children. For example, in California, a summary dissolution provides an expedited divorce process for couples married for less than five years and with no children, among other factors.
Top 2 Legal Issues You Should Avoid
1. Lifestyle Clauses
Lifestyle clauses are clauses written into a prenup that outline how individuals should behave during their marriage, or outline the decisions they have made concerning matters such as in-laws, religion, the upbringing of children, and even infidelity (also known as a “bad boy” or “bad girl” clause).
Laws relating to these agreements, and therefore lifestyle clauses, are state-dependent. Thus, if you are considering including a lifestyle clause in your prenuptial agreement, first check your state laws to ensure they are legally admissible and enforceable. For example, only some states will enforce a “bad boy” or “bad girl” clause, which requires financial compensation should one party commit adultery or any other infidelity.
The enforceability of a lifestyle agreement is dependent on both the state’s laws and whether the court considers the clause to be fair and legally sound (and thus, legally enforceable). Although many states do not enforce lifestyle agreements, many couples choose to include them to help guide their behavior and decisions in their marriage.
If you’re unsure about the legality of lifestyle clauses in your state, or have any further questions, consult a lawyer before including them in your prenup.
2. Contrary to Public Policy
The law favors stable marriages in society. Therefore, you are not allowed to “buy” a divorce in a prenuptial agreement. For instance, you cannot include a provision that you will make a lump sum payment to get out of a marriage.
