Legal Definitions - prenup

A "prenup" is the common, informal term for a prenuptial agreement.

This is a legally binding contract signed by two individuals before they get married. Its primary purpose is to specify how assets, debts, and spousal support (alimony) will be divided or handled if the marriage ends in divorce or if one spouse passes away. It allows couples to make financial decisions proactively, rather than relying solely on default state laws that would otherwise apply.

• Example 1: Protecting a Family Business

  Before marrying, Maria, who inherited a successful manufacturing business from her parents, asks her fiancé, David, to sign a prenup. The agreement specifies that her ownership stake in the business, along with any profits or appreciation in its value, will remain her separate property, even if the marriage were to end in divorce. It also outlines how assets acquired during the marriage would be divided.

  This example illustrates how a prenup can be used to protect significant pre-marital assets, such as a family business, ensuring they remain separate property and are not subject to division as marital assets in the event of a divorce.

• Example 2: Safeguarding Inheritances in a Second Marriage

  Robert, a widower with two adult children, is planning to marry Sarah, who has no children. Robert wants to ensure that a significant portion of his estate, which he intends to leave to his children from his first marriage, is protected. He and Sarah sign a prenup that clearly designates certain assets as Robert's separate property, intended for his children, and outlines how other assets acquired during their marriage would be divided in the event of divorce or Robert's death, without impacting his children's inheritance.

  This demonstrates a prenup's utility in a second marriage, particularly for individuals who wish to safeguard inheritances for children from a previous relationship and clarify estate planning intentions.