Contract Glossary
Prenuptial Agreement
Definition
A prenuptial agreement (prenup) is a contract entered into by two people before marriage that establishes how assets, debts, and financial matters will be handled during the marriage and in the event of divorce or death. It typically addresses property division, spousal support, debt allocation, and inheritance rights. Prenuptial agreements allow couples to override default state divorce laws with their own negotiated terms, providing certainty and reducing the potential for contentious disputes.
In Practice
Before their wedding, a business owner and a teacher sign a prenuptial agreement. It states that the business owner's company (started before the marriage) remains separate property, but any increase in the company's value during the marriage will be split 70/30 in a divorce. The teacher's pension remains fully theirs. Both parties waive spousal support if the marriage lasts less than five years but agree to graduated support for longer marriages. Both had independent attorneys review the agreement.
Example Clause
Each Party shall retain as their separate property all assets owned prior to the marriage as listed in Exhibits A and B. In the event of dissolution, marital property acquired during the marriage shall be divided equitably. Neither Party shall have any claim to the other Party's pre-marital business interests, except that appreciation in value of such interests during the marriage shall be considered marital property.
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