How Prenuptial Agreements Work

by Margaret Franson

Are you planning to get married soon? Remember thinking it was going to be a simple affair? Now your simple affair involves 400 people, eight live swans and a stage manager. Be prepared: Thefinancial side of marriage can also be a lot more complicated than you expect.

The pre-wedding period is a happy time of love and growing commitment. Most engaged couples, of course, believe that their marriage will last “until death do us part.” They certainly don’t want to think about an unhappy ending to their life together.

But with two out of every five marriages resulting in divorce, some questions arise. How would you want your assets, debts and property handled in the event of a divorce or death? Should one of the spouses receive alimony? A growing number of engaged couples are considering these issues and others before marriage. Some couples decide that the best way to be prepared for any eventuality is to draw up a prenuptial agreement.

A prenuptial agreement is a private contract entered into by two parties before a marriage or civil union takes place. It may also be called a premarital agreement, an antenuptial agreement, a marriage contract or a prenup for short. Its purpose is to settle financial matters in advance in the event of either a divorce or death.

While a prenuptial agreement may seem unromantic, some experts say it’s just smart financial planning. It ensures that your financial matters are handled according to your wishes rather than the state’s decision. Determining whether a prenup is right for you, however, is a very personal decision that should only come after a serious discussion with your significant other. Should you have that talk? What points should it cover? Read on.


In the late 1800s, less than 5 percent of marriages ended in divorce. According to the National Center for Health Statistics, about 40 percent of first marriages now end in separation or divorce within 15 years.

Do I Need a Prenup?

A popular misconception is that prenuptial arrangements are only for the wealthy. Anyone who has personal assets, liabilities or property — or children from a previous marriage — should consider a prenup.

A prenuptial agreement can clarify the financial rights and responsibilities of each party during the marriage and the distribution of property in the case of divorce or death. Prenups can protect spouses from each other’s debts. They can also spell out how one spouse’s property can be passed on to children from a previous marriage. In addition, a prenuptial agreement can indicate whether one of the parties is to receive alimony.

What the prenuptial arrangement cannot cover is anything illegal. Nor can the prenup have a provision that goes against public policy. For example, future child custody rights cannot be arranged in the agreement. States consider the welfare of children a matter of public policy to be decided by the courts when a marriage ends.

Many experts believe that prenuptial agreements should be confined to financial issues. They suggest that nonfinancial matters, such as household and child-care responsibilities, be handled in other ways.

Usually, prenuptial agreements involve a time element. Most become effective on the day of the wedding and last indefinitely. For various reasons, some are designed to go into effect after a certain number of years have passed. Others contain a provision to end after the couple has been married a specified period of time.

Discuss the possibility of a prenuptial arrangement well before the wedding. Unromantic as the subject is, it’s important to remember that finances are an integral part of the marriage partnership. Discussing these matters before you take your vows may prevent problems from developing later.

In addition to allowing sufficient time for planning, another basic rule in preparing a prenup is to be truthful about your financial situation. If one person hides something, this omission can make the agreement invalid. Be frank and honest — in discussing not just your finances but what you want out of a prenuptial agreement. Both parties need to agree on the goals of the prenup.

Here is a checklist to help in planning a prenuptial agreement:

  • Draw up a list of all assets, liabilities, and property.
  • Identify important issues.
  • Determine what your goals are.
  • Be frank and honest in your discussions.

After these issues have been discussed, you then are ready to prepare the prenup. You’ll have to decide whether to draw up the prenuptial agreement yourselves or to seek legal assistance.

To find out how preparing a prenup can be like writing your own vows, read on.


Prenups are not a new idea. They’ve been around for thousands of years in some form or other. Historians believe that they were first used in ancient Egypt. In many countries, royal families make provisions to protect their wealth. Parents in some cultures negotiate the marriage and financial arrangements for their children. In fact, these marriages are often called arranged marriages.

The Costs and Legalities of Prenuptial Agreements

Just as not everyone wants to promise to love, honor and obey, some engaged couples want to prepare their own prenuptial agreement. Books and online sources can provide information and forms to use. Doing it yourself is certainly the least expensive method. But be sure today’s savings don’t turn into tomorrow’s financial disaster. Experts usually recommend that you consult an attorney to prepare the document. In fact, many experts believe that each party needs a separate attorney.

The attorneys you consult should practice matrimonial or family law. They should be familiar with prenuptial agreements and knowledgeable about the laws of the state in which you will live after your marriage. The attorneys co-write the document, keeping their clients’ best interests in mind. This arrangement helps to make the prenup fair to both parties. It also helps to ensure that the document will be valid and enforceable in court, should it be necessary to invoke the prenup. Of course, hiring attorneys is more costly than preparing it yourself.

Prenuptial agreements are recognized as legally binding documents throughout the United States. However, you should check to determine whether you live in a community property state. In these states, the law considers assets acquired during a marriage to be jointly owned and under most circumstances requires them to be equally distributed when a marriage ends.

To be considered valid and enforceable, a prenuptial agreement must

  • be completed before marriage
  • be written
  • be notarized
  • be voluntary for both parties
  • contain full financial disclosure
  • be fair to both parties
  • not be illegal or opposed to public policy

A judge has the power to rule that the agreement is not valid if it fails to meet any of these criteria.

If you would like to know more about the legal aspects of prenuptial agreements, you can follow the links on the next page.


Prenuptial agreements are enforceable in many countries of the world. The international Hague Convention on the Law Applicable to Matrimonial Regimes authorizes prenuptial agreements. In some countries, prenups may have other names, such as binding financial agreements or marriage contracts. One nation that does not recognize prenuptial agreements is the United Kingdom, where they’re considered opposed to public policy.

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