If you are planning to get married, or are already married, you may be considering if a marital agreement is right for you. Marital agreements are put into place in order to protect property that you acquire before or during the course of your marriage. Such agreements are especially important in states that follow the equitable division of property, such as New Jersey.
What is equitable division of property?
In an equitable distribution state, the divorce court will divide your marital property in what it considers to be an equitable manner. Equitable means fair, but not necessarily equal.
Under these rules, the court is permitted to grant one spouse a significantly larger portion of marital property than the other. The judge is not required to split the assets in half equally.
How will a marital agreement benefit me?
In equitable distribution states, marital agreements, particularly prenuptial agreements, can have a significant weight with the court since they typically address how assets should be divided in a divorce.
What is a prenuptial agreement?
A prenuptial agreement is a formal written agreement made between partners prior to marriage. The contract will provide details about property owned by each party and the rights and obligations each person has concerning that property during the course of the marriage and in a divorce.
What is a postnuptial agreement?
A postnuptial agreement is very similar to a pre-marital agreement in that it addresses how a married couple will divide property in case of divorce. The main difference is that the agreement is signed after the wedding has taken place.
Which agreement is right for me?
Fortunately, there is no need to choose one agreement over the other as a postnuptial contract may still be enacted if a prenuptial agreement was previously signed.
Deciding on a pre-marital agreement will depend on your financial situation prior to the marriage. A postnuptial contract may later be required by a change in financial circumstances to modify the prenuptial. For example, some businesses such as hedge funds and private equity investors require their partners to sign a post-marital agreement in the instance that divorce may jeopardize the partner's stake in the company.
The most important reason for creating either agreement is so that you and your spouse have the opportunity to decide how your property is divided instead of leaving it in the hands of the court.
For advice concerning the need for a prenuptial or postnuptial agreement, contact an attorney with experience in family law.