“If you ain’t no punk/holla “we want prenup!” Kanye West’s Gold Digger introduced many children to the concept of a prenup before they even understood love. Prenup is short for prenuptial agreement, but what does a prenup actually do? Read on to learn the basics of prenuptial agreements including what needs to go into one such agreement.
What Are Prenuptial Agreements?
Prenuptial agreements are private contracts between a couple that they sign before they get legally married. “Nuptials” is another word for the legal vows of marriage, so prenuptial simply means before the vows. Prenuptials dictate how any financial assets will be distributed after the marriage is over. Those assets include actual money, real estate, stocks and bonds, and more.
Typically, prenuptial agreements come into play when one party has significantly more wealth than the other. Even if the less wealthy partner is still worth millions. If the case it is likely because the wealthier partner is worth ten or even hundreds of millions. Prenuptial agreements for celebrities or well-known personalities often include how public the partners are allowed to make the divorce.
Full Disclosure Is A Must
In pretty much every state in the union, both spouses must disclose all of the assets in their name. The lack of full disclosure essentially nullifies the prenuptial agreement. It is actually a best practice to outline net worth in the agreement. In addition to net worth, it is smart to outline a general breakdown such as bank accounts, real estate holdings, etc. Even potential future income, such as inheritance, needs to be included.
This is essentially all bout informed consent. If one partner is not aware of the other’s true worth, the decision to sign or not sign the agreement is uninformed.
A prenuptial agreement is something that needs time and consideration. It is not something to spring on a partner too close to the ceremony. Couples need to start planning their prenuptial agreement soon after their engagement.
Fortunately, all the individuals have to do is make the proper disclosure to their respective legal counsel. The lawyers draw up all of the paperwork, and can include any special requests, as long as they’re legal.
When one spouse is significantly wealthier than the other, a huge question during the divorce is alimony. Prenuptials traditionally do not address alimony. In the rare case that the prenuptial agreement does address alimony, it is usually just spouses waiving the right to it. There is no precedent for establishing potential alimony for the future. In fact, in all likelihood, the court would throw out a prenuptial agreement that attempted to set up alimony.