Latest News: Who Needs a Prenup?

Tuesday, 22 September 2009

Contrary to popular opinion, prenups are not just for the rich. While prenups are often used to protect the assets of a wealthy fiancee, couples of more modest means are increasingly turning to them for their own purposes. For example, a marrying couple with children from prior marriages may use a prenup to spell out what will happen to their property when they die, so that they can pass on separate property to their children and still provide for each other, if necessary. Without a prenup, a surviving spouse might have the right to claim a large portion of the other spouse's property, leaving much less for the kids.

If you don't make a prenuptial agreement, your state's laws determine who owns the property that you acquire during your marriage, as well as what happens to that property at divorce or death. (Property acquired during your marriage is known as either marital or community property, depending on your state.) State law may even have a say in what happens to some of the property you owned before you were married.

Under the law, marriage is considered a contract between bride and groom, and with that contract comes certain automatic property rights for each spouse. For example, in the absence of a prenup stating otherwise, a spouse usually has the right to:

(1) Share ownership of property acquired during marriage, with the expectation that the property will be divided between the spouses in the event of a divorce or at death

(2) Incur debts during marriage that the other spouse may have to pay for, and
share in the management and control of any marital or community property, sometimes including the right to sell it or give it away.

If these laws -- called marital property, divorce, and probate laws -- aren't to your liking, it's time to think about a prenup, which in most cases lets you decide for yourselves how your property should be handled.