Prenuptial Agreement

A prenuptial agreement is a contract between two partners who plan to marry. The agreement states how assets, earnings, and debts will be divided if the partnership ends, either through divorce or death. It also specifies any rights to spousal support. A prenuptial is also known as a "premarital agreement." When partners make a similar agreement after they are married, it is known as a "postnuptial agreement." When partners cohabitate but do not marry, the agreement is known as a "no-nuptial agreement."

State laws govern how property is distributed and debts are shared when a marriage ends. Persons who sign a prenuptial agreement give up the right to have their property and debts divided according to those laws and agree to terms that they decide upon. In the past, prenuptial agreements were often used when one partner was significantly older or wealthier than the other partner. In the twenty-first century, they are often used to protect the assets and property acquired prior to the marriage or when a person remarries and wants to protect assets for children of a prior union.

Background

Prenuptial, postnuptial, and no-nuptial agreements cover the financial issues of two people involved in an emotional relationship. Some people oppose prenuptial agreements on the grounds that they conflict with the premise of marrying "till death do us part." Some people oppose them not because they are based on the assumption the marriage may fail, but because they assume that one partner may act in a self-serving way in the future rather than for the benefit of the partnership.

Despite partners entering a marriage with the best of intentions, an estimated 43 percent of first marriages in the United States end in divorce or separation, according to 2022 statistics. In addition, 60 percent of second marriages and 73 percent of third marriages also ended in divorce. An advantage to having a prenuptial agreement is that if the marriage ends in divorce, the property and debts will be divided based on the partners’ desires rather than the laws governing the dissolution of marriage. Advocates of prenuptial agreements point out that financial issues will need to be resolved if the union ends; having a prenuptial agreement gives individuals the opportunity to have some choice and control in how those issues will be resolved.

In the absence of a prenuptial agreement, the laws of the state where the couple resides generally determine how the couple’s property and debts will be divided. Before making a prenuptial agreement, a couple should research the laws of their state. If the laws cover all of the financial issues in the way that meets the couple’s needs, a prenuptial agreement may not be needed. A prenuptial agreement, however, will protect a couple’s expressed desires if the couple moves to another state with different laws.

State laws governing property and debts upon the dissolution of a marriage are based on either community-property statutes or common laws. Community-property states consider all property acquired during a marriage as community property that is to be divided equally between the partners if the marriage ends. Common-law states consider the property acquired during a marriage to be the property of the spouse who earned or acquired it, and it is divided based on factors related to equitable distribution codified in the relevant state’s laws.

Brief History

Prenuptial agreements once were a tool used predominately by wealthy individuals who wanted to safeguard their substantial assets and circumvent state laws governing property division in case the marriage failed or ended due to death of the wealthier partner. Common prenuptial agreements were ones in which one partner was significantly older than the other. Many of these prenuptial agreements were intended to limit what the younger partner could inherit upon the older partner’s death, particularly if the marriage had been relatively short.

Prior to 1970, many of these prenuptial agreements failed to fulfill their intended purposes. Courts often considered them invalid and refused to uphold their terms. During the 1970s, the women’s rights movements brought many changes that led to greater acceptance and more widespread use of prenuptials. Society’s attitudes about the need for men to support women following a divorce changed as more women entered the workforce and gained incomes—and assets—of their own. Courts awarded alimony less frequently as women were expected to become financially independent following a divorce. Around this time, the number of marriages ending in divorce increased and states passed more no-fault divorce laws.

People getting married for the second or third time often brought more assets to a marriage than younger people getting married for the first time. People who had delayed marriage and were getting married for the first time at a later age often had accumulated more assets than younger partners in earlier decades. And divorced people who had experienced a difficult or unsatisfactory division of property by the court wanted to avoid a similar experience in the future. As more people entered marriages with more assets, the desire to identify how that property should be divided if the union ended grew, and prenuptial agreements became more common.

By the first decade of the twenty-first century, all states and the District of Columbia had laws that recognized valid prenuptial agreements. During the 1980s, the Uniform Law Commission created the Uniform Premarital Agreement Act (UPAA) in an attempt to create more uniformity among state laws governing prenuptials. This act provides a standard approach to determining the validity of a prenuptial agreement. As of 2024, twenty-eight states and the District of Columbia had adopted the UPAA. Several other states had created validity standards similar to those of the UPAA.

Elements of Valid Prenuptial Agreements

Prenuptial agreements are recognized throughout the United States and the District of Columbia. In order to be considered valid, the agreements must meet five terms. The agreement must be in writing; it must be made voluntarily; it cannot be unconscionable; it must include a full disclosure of all property and assets by both parties; and it must be executed by both parties before a notary public.

A prenuptial agreement is considered valid only if it can be shown that it was made voluntarily. If one partner presents the agreement shortly before the wedding ceremony, there can be a presumption that the other partner was pressured or coerced into agreeing without due consideration. In order to ensure that the agreement is voluntary, it should be discussed far in advance of the wedding date; both partners should contribute to creating or finalizing its terms; and each partner should review the terms independently with his or her own attorney. A court may invalidate a prenuptial agreement in which both partners used the same attorney.

A prenuptial agreement must be in writing. A court will not uphold an oral prenuptial agreement. Similarly, a prenuptial agreement must be signed by both parties before a notary public. A prenuptial agreement that is not executed before a notary public will be considered invalid.

A prenuptial agreement must fully disclose all financial assets and liabilities, which includes all property and income as well as all debt. If one party fails to disclose assets in a bank account, financial obligations such as child custody or alimony, or other assets or debts, the prenuptial agreement may be considered invalid.

A prenuptial agreement cannot include any invalid terms or be unconscionable. It must be fair to both partners. If the agreement includes terms that clearly favor one party, it may be considered invalid.

A prenuptial agreement cannot include terms about child custody, visitation, or child support. Those issues are determined independently of any premarital agreements, as they are governed by what is in the best interest of the child, not the interests of the parents.

Prenuptial agreements must include only terms related to financial issues. They are not relationship agreements. They do not set out the terms for the relationship, such as that one partner promises to support the other financially if that partner wants to go to college or where they will go for vacations. Nor can they include terms about what partners owe each other emotionally.

Modern Prenuptial Agreements

The use of prenuptial agreements increased following the recession of the late 2000s. The recession resulted in numerous bankruptcies and foreclosures, bringing financial issues to the forefront of people’s awareness and, possibly, making people entering a marriage less willing to assume the debts of a partner. According to a 2023 survey conducted by the Harris Poll, an analytics company founded in 1963, 47 percent of engaged or married Millennials (those born between 1981 and 1996) said they entered into a prenuptial agreement. About 41 percent of engaged or married Gen Z (those born between 1997 and 2021) responded said they had signed as prenup as well.

Today, prenuptial agreements are used by diverse groups of people for a variety of reasons. They are used by older couples with children by other unions who want to protect assets they have acquired prior to the marriage for those children or their grandchildren. They are used by men and women who have built up businesses prior to marriage and want to keep the assets and liabilities of those businesses independent of the marital property. They are used by people who cohabitate who want to establish terms for how they will handle debts and property should they separate. They are used by same-sex couples who want the same protections afforded married couples but are not granted them by their states’ laws.

Once shunned as a tool exploited by wealthy people, prenuptial agreements today are generally considered a valuable tool to handle the financial aspects of a marriage or personal relationship between two partners much as one would use a similar tool to handle the financial aspects of a business partnership.

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