The terms “prenuptial agreement” and “postnuptial agreement” refer to legal documents that can play a crucial role in outlining a marriage’s financial and asset-related concerns, yet they differ significantly in their timing and purpose.
Understanding what these documents do – and when they can be executed – can help individuals to make more informed choices about their rights and options.
What is a prenuptial agreement?
This is a legal contract entered into by a couple before they get married. Its primary purpose is usually to establish each party’s financial rights and responsibilities in the event of a divorce or death. Prenups are crafted to address various concerns, which may include certain expectations related to married life.
Common key features of a prenuptial agreement include:
- Asset division: Clearly outlines how assets acquired during the marriage will be divided.
- Spousal support: Specifies whether alimony or spousal support will be provided and under what conditions.
- Debt allocation: Determines how debts incurred during the marriage will be assigned.
Prenuptial agreements that are focused on financial matters tend to be particularly useful when future spouses own a small business and/or significant financial assets when entering their union.
What is a postnuptial agreement?
Contrary to a prenuptial agreement, a postnuptial agreement is established after a couple has already tied the knot. It serves a similar purpose in defining financial arrangements but is executed during the marriage. Couples might opt for a postnuptial agreement for various reasons, such as a change in financial circumstances or a desire to clarify existing arrangements.
Common key features of a postnuptial agreement include:
- Financial adjustments: Allows couples to modify financial agreements during the course of their marriage.
- Asset clarification: Like prenups, postnuptial agreements can clarify a potential division of assets but can address changes in circumstances.
- Crisis management: Provides a framework for handling unforeseen financial challenges within the marriage.
While a prenup often serves as a proactive measure to establish financial expectations before marriage, a postnup offers flexibility for adapting to changing circumstances during the marital journey. Whether considering a prenuptial or postnuptial agreement, seeking legal counsel is essential to help ensure the agreement serves both parties’ best interests.