Legal Definitions - marital agreement

A marital agreement is a formal contract made either by two people who are engaged to be married, or by a couple who are already married. Its primary purpose is to define how their assets, debts, and other financial matters will be managed and owned during their marriage, and how they would be divided if the marriage ends, either through divorce or the death of one spouse.

These agreements provide clarity and certainty, helping couples plan for their financial future and potentially avoid disputes down the line. Common types include prenuptial agreements (made before marriage) and postnuptial agreements (made during marriage).

• Example 1 (Prenuptial Agreement): Before their wedding, Sarah, a successful architect with a substantial retirement fund and a family home, and Mark, a freelance artist with a modest income, decide to create a marital agreement. This agreement specifies that Sarah's pre-existing assets, like her home and retirement fund, will remain her separate property, while any new assets or debts accumulated after their marriage will be considered shared. This illustrates a marital agreement made before marriage to clarify the ownership of assets.

• Example 2 (Postnuptial Agreement for Business Ownership): David and Emily, who have been married for ten years, jointly started a successful online retail business during their marriage. As the business grew significantly, they decided to enter into a marital agreement. This agreement outlines the valuation method for the business and how ownership shares would be divided or bought out if they were to separate, ensuring a clear plan for their most significant shared asset. This demonstrates a marital agreement made during marriage to manage a key marital asset.

• Example 3 (Postnuptial Agreement for Blended Families and Estate Planning): Robert and Lisa, both in their second marriages with adult children from previous relationships, want to ensure their respective children inherit specific family heirlooms and investment accounts they each brought into the marriage. They sign a marital agreement clarifying that these particular assets will remain separate property and will pass directly to their own children upon their death, rather than being subject to division as shared marital property. This shows how a marital agreement can be used during marriage to manage property distribution upon death, especially in blended families.