Legal Definitions - marriage settlement

A marriage settlement is a formal legal agreement entered into by individuals either before or during their marriage. Its primary purpose is to define and arrange the ownership, management, and distribution of assets, property, and financial responsibilities between the spouses. These agreements are designed to provide clarity and certainty regarding financial matters, often addressing what would happen in the event of divorce, separation, or death.

• Example 1: Protecting Inherited Wealth Before Marriage
  Before getting married, Sarah, who inherited a substantial family trust, and Mark, who owns a successful but volatile startup business, decide to create a marriage settlement. This agreement specifies that Sarah's inherited trust funds will remain her separate property, and Mark's business assets will also be treated as his individual property, regardless of future marital contributions. They want to ensure that in the event of a divorce, these specific assets are not subject to division as marital property.

  This example illustrates a marriage settlement made *before* the marriage (often called a prenuptial agreement) to clearly define and protect individual assets, providing financial certainty for both parties.

• Example 2: Estate Planning for a Blended Family During Marriage
  After being married for fifteen years, David and Emily, both with adult children from previous relationships, decide to update their estate plan. They want to ensure that a specific vacation home David owned before their marriage passes directly to his children, and a valuable art collection Emily inherited goes to her children. To formalize these wishes and prevent potential disputes among their heirs, they execute a marriage settlement that clearly designates these assets as separate property for inheritance purposes, even though they are married.

  Here, the marriage settlement is created *during* the marriage (often called a postnuptial agreement) to manage property distribution for estate planning, particularly relevant in blended families to ensure specific assets pass to designated heirs.

• Example 3: Asset Protection from Business Risks During Marriage
  Maria's husband, Carlos, is about to launch a high-risk technology startup that requires significant personal investment and carries potential liability. To protect their family's existing assets, such as their primary residence and joint savings, from potential business creditors, Maria and Carlos enter into a marriage settlement. This agreement reclassifies their jointly owned home and a portion of their savings as Maria's sole property, ensuring these assets are shielded should Carlos's business venture face financial difficulties or lawsuits.

  This example demonstrates a marriage settlement used *during* marriage for asset protection, specifically to safeguard family assets from potential business risks by altering the legal classification of marital property.