A prenup is excellent in marriage, as it ensures assets are allocated correctly. Learn more about the things you should add to your prenuptial agreement.
A prenuptial agreement is a legal document drafted by a couple and their attorney prior to a marriage or civil union. Couples choose to sign this document because it enables them to control the legal rights they acquire upon marriage. It also addresses what would happen if the marriage ends in divorce or in the event that one spouse dies. All 50 US states honor prenuptial agreements, but these agreements are not a requirement. We recommend creating a prenuptial to protect your personal assets.
Now that we’re on the same page as to what a prenuptial is, you might wonder what a prenuptial agreement entails. Add the following things to your prenuptial agreement to ensure the document has as much detail as possible.
Premarital Assets and Debt
Any property, assets, or debt you acquire before marrying your partner is a premarital asset, and this applies to debt. For example, you might have a small home and student loan debt prior to marriage. In the event that you divorce your spouse or they pass away, your separate property will remain under your control due to this section in your prenuptial agreement. The small home will remain yours, and your partner will not be responsible for your debt.
Marital Assets and Debt
Any property, assets, or debt you acquire after marrying your partner becomes a marital asset. If you and your spouse plan on investing in a vacation home or other property after marriage, it should go under this section of the prenup. When it comes to money, the financial key to a happy marriage is to set boundaries and communicate by listing assets and debts and how you plan to divide them in the future to avoid issues.
What you might not know is that retirement accounts are marital property. If you divorce your spouse without a prenup, the court will divide your retirement accounts fairly. When you want your 401K accounts to remain separate upon death or divorce, you must include that statement in your prenuptial agreement.
Business Property and Earnings
Do you or your spouse own a business? Any information regarding the earnings and property of this business is crucial to add to your prenup. If you and your partner split, the prenuptial agreement can determine what percentage goes to your ex and how to determine the value of the business going forward.
Children From Previous Marriages
Do you have children from previous marriages? You should never leave them out of your prenup because it can outline where your assets go if you pass away. For example, if you don’t add your kids to this document and you do pass away, your assets and inheritance could go to your spouse instead. Include what assets you will give your children and how you intend for executors to divide things between all parties.
After adding these things to your prenuptial agreement, don’t forget to sign the document. If you don’t sign or file the document correctly, it could be a reason your prenup is invalid. Speak with an attorney when drafting this document to ensure you have the correct details and information. What else will you include in your prenuptial agreement?