A prenuptial agreement—also known as a “prenup” or “antenuptial agreement”—is a common tool to protect income and assets. The agreement becomes enforceable upon marriage and applied in the event of a divorce. A prenup cannot arrange for custody or dictate an amount of child support to be paid. This must be negotiated at the time of divorce in accordance with the laws and the best interests of the children. As parties are typically adversarial at the time of divorce, a prenup can be particularly valuable in limiting litigation and creating a more expedient divorce process.
A party intending to enter into a prenuptial agreement should understand that a court will more likely than not uphold a fully-executed agreement entered into knowingly and voluntarily. Like any enforceable agreement, expect that you will be bound by the terms of your prenup.
Most people do not expect to get divorced when they marry. Nonetheless, many plan for it due to the high rate of divorce. Obviously it is impossible to predict exactly where one’s life will be in the future with regard to children, income, property, assets and liabilities. However, what is possible is for a person to—at the prenup drafting stage—imagine what would be in their best property and financial interests if a divorce were to occur, taking into consideration the entirety of their current situation as well as that of the other party. What do you imagine your property and financial circumstance will be in five, ten, twenty years? If you agree in a prenup to receive $20,000 per year in alimony and you are the lower wage earner making $30,000/year while the other party earns $250,000/year, are you ok receiving $20,000 per year for 7 ½ years for example if in 15 years you file for divorce and you still earn $30,000 but the other party now earns $400,000? Or, alternatively, if you are the paying spouse do you want to guarantee a large sum in a prenup that may in the future be beyond your means? Do you have separate property that you want to protect from any claim of the other party in the event of a divorce?