A prenuptial agreement is also known as a premarital agreement. A prenuptial agreement is a contract between you and your spouse that states what would happen if the marriage ends. While the content of a prenuptial agreement often varies significantly, most prenuptial agreements provide for the division of property (equitable distribution) and spousal support (maintenance or alimony). It is especially advisable to execute a prenuptial agreement to avoid a potential legal battle in a high net worth divorce. If you take the time to clearly define the equitable distribution of any wealth you accumulate during the marriage or assets you possessed before the marriage, the chances that you will end up in a contested divorce will be far less.
The prenuptial agreement can be a very useful tool towards limiting the financial risks that one spouse may incur if he or she were to get married. The document is also used to limit a person’s responsibilities in the event that one party to a marriage predeceases the other, by waiving their individual rights to the right of election (taking their share of the decedent’s estate which is left by Will or allowed by statute).
A postnuptial agreement is basically the same as a prenuptial agreement, except that you and your spouse enter into it after you and your spouse have already gotten married, instead of before you marry. In a postnuptial agreement, you and your spouse disclose to each other all the money and property you currently own, both separate property and marital property. Then, you set forth the rights and responsibilities each of you will have during the marriage, including how you will divide your money and property in the event of divorce or death of one or both of you.
A properly drafted prenuptial and postnuptial agreement can serve to define and protect the rights and interests of both parties. Entering into such an agreement does not have to be an emotionally charged process. With the guidance of an experienced lawyer, a prenuptial and postnuptial agreement can be a practical, relatively easy solution that may prevent future disputes or difficulties.
Attorney at Law, Certified Public Accountant, LL.M Taxation
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