Necessity

Formerly utilized by persons of wealth and property, prenuptial agreements are becoming more common as marriages occur later in life, when careers have been established and significant assets have been accumulated by each party. Additionally, prenuptial agreements may be vital in determining asset ownership and inheritance rights of children from a previous marriage. By entering into a prenuptial agreement, the couple is directing that property rights are determined by the contract rather than the usual rights afforded to a spouse under the law.

Sidebar: Spouses residing in a community property state have their assets divided equally on divorce. In other states, depending on state law, property may be divided based on equity and fairness. As long as certain requirements are met, the prenuptial agreement supersedes laws concerning the division and distribution of property when the marriage terminates.

The prenuptial agreement generally protects the spouse with the greater pre-martial wealth on termination of the marriage. Under a prenuptial agreement, property, cash, assets and family businesses owned by either or both of the spouses can be protected against a claim by the other if the marriage ends. The agreement directs the distribution of property when the marriage ends, either by death or divorce, along with the amount of support payments a spouse is entitled to receive. By entering into the prenuptial agreement, the couple is agreeing to remove the court from the determination of how a couple's property will be divided in a divorce, or in an estate matter should one spouse die. Some prenuptial agreements expire after a period of time. For instance, after 10 years of marriage the agreement may expire and the spouse's legal rights will be determined under the law of the state where they reside.