Prenuptial Agreements: What They Can and Cannot Protect?

Marriage is the social institution that defines the relationship between spouses and has a major impact on their lives and future. The modern world is characterized by changes in views on family relationships, including the possibility of signing a premarital agreement. This document regulates the rights and obligations of the spouses who decide to enter into it before (prenuptial) or during (postnuptial) the marriage.

Nevertheless, the term “prenuptial agreement” still evokes negative associations in many people. The thoughts of distrust between spouses, a planned divorce before marriage, and mercantile intentions immediately come to mind.

Although the attitude to such agreements is quite ambiguous, legal experts argue that they help spouses avoid many unpleasant situations and disputes in the future. The main advantage is that by entering into a prenuptial agreement, also known as a prenup, each spouse understands what they will be left with in case of a divorce. In other words, it clearly regulates the couple’s material relations.

The choice to enter into a prenup is personal and requires careful discussion and consideration. It is important to evaluate its advantages and disadvantages before making a decision. In this article, we will discuss prenuptial agreements, their pros and cons, and the legal context of their application. We’ll try to answer the most pressing questions like: “What happens if you sign a prenup?” “Do prenups work?” and “What happens if you sign a prenup and get divorced?”

What Is a Prenuptial Agreement?

As defined in IN Code § 31-11-3-2, a prenuptial agreement is a written agreement between two people before the marriage that becomes effective upon it. The document regulates their property relations, rights, and obligations and is concluded exclusively voluntarily by those who are just planning to get married. To answer the question, “What’s a prenuptial agreement?” shortly, it is a kind of insurance for married life.

By signing the agreement, each party clearly understands what part of the property will remain in their ownership in the event of a divorce. This type of legal relationship is especially suitable for those who already have private property, business, or real estate at the time of marriage.

The advantages of a prenuptial agreement are:

  • The possibility of transferring property rights of one partner to the other.
  • Taking into account the wishes of both parties regarding the division of property.
  • Defining situations when the terms of the agreement will come into effect.
  • Red tape reduction, including court proceedings in case of divorce.
  • Reducing tension in conflict situations since everyone has confidence in the future.

The prenuptial agreement meaning is quite weighty if we consider some examples. The document can stipulate that the house remains with the person with whom the children will live, or the wife will get an apartment, and the husband will retain the rights to the business. The conditions under which certain rights come into force are also specified. For instance, a wife will receive real estate and a car if her husband cheats on her.

Another advantage of a prenuptial agreement is that it defines who will repay debts and to what extent after the divorce. In this case, the contract is more protective than a lawsuit.

Drawing up a prenup makes it possible to:

  • Secure ownership of personal property.
  • Reduce the risk of being left with nothing after a divorce.
  • Restrain and bring partners closer together in tense moments of life.

The main stereotype that evokes doubt in many people before entering into a prenuptial agreement is that it is signed with the prospect of divorce. However, any lawyer would disagree with this opinion. The main purpose of a prenup is to help avoid property disputes, which, in turn, can lead to divorce.

Reasons Why You May Want to Have a Prenuptial Agreement

A prenuptial agreement is mostly entered into when spouses have something in their possession: property, savings, business, etc. So, here’s the answer to the question, “What is the purpose of a prenup?”: to protect what is yours, safeguard your children’s future, and define any specific financial terms.

Dispute resolution in a divorce with a prenup may be much easier in several aspects:

  • ‍Business. If one spouse is the owner or co-owner of a business, the other party will have the right to claim a share in this business in case of a divorce. Therefore, people may even exchange prenuptial agreements before starting a business partnership. No one wants someone else to claim the business after one of the partners’ divorce. So, it is primarily a guarantee of business stability.
  • Debts. A prenuptial agreement is necessary in case of your spouse’s excessive credit obligations, in which you did not participate and which you do not control. You can specify that these debts and liabilities remain with the direct debtor.
  • Assets. If you own significant property you bring into the marriage, you may wish to preserve it in case of a divorce without sharing it with the spouse.
  • Specific Terms. A prenuptial agreement will help settle property division issues differently from what the law provides. In it, you may define any specific terms and the way your marital and separate property should be viewed and divided in the event of a divorce. For example, if one of the spouses inherits a house, they may want it to belong to both of them. On the other hand, the wife’s parents may give the young couple money for an apartment and insist that it should remain with their daughter if they eventually divorce. Therefore, spouses should sign a prenuptial agreement and establish the partners’ rights to each object.
  • Dependents. If you have any dependent children from the previous marriage or elderly parents you take care of, you may include any terms into a prenup protecting their rights or your assets needed for their support. By the way, you can even include clauses concerning pet ownership if you have any.

What Does a Prenuptial Agreement Cover?

Prenuptial agreements regulate property relations between spouses. According to IN Code § 31-11-3-3, property is defined as “interest, present or future, legal or equitable, vested or contingent, in real and personal property, including income and earnings.” If you wonder, “What does a prenup protect?”, you can be sure that it regulates everything related to movable and immovable property, savings, or corporate or financial rights.

So, what is included in a prenup? As stipulated in IN Code § 31-11-3-5, it may cover issues related to:

  • Each spouse’s rights and obligations in separate and joint property acquired before or during the marriage, including their rights to use, buy, sell, exchange, assign, dispose of, or deal with the property in any other way;
  • The disposition of any property in the event of divorce, legal separation, death, or any other event;
  • The creation of a will, a trust, or any other arrangement;
  • Spousal maintenance modification or elimination;
  • Life insurance and disability policies ownership;
  • Laws governing the agreement creation;
  • Any other matters the couple chooses, as long as they do not violate Indiana law.

“Any other matters” may include but are not limited to:

  • Separate debts acquired by either party before and during the marriage;
  • Property and financial interests of dependents (children from previous marriages, elderly parents, etc.);
  • Educational and religious aspects related to joint children.

Interestingly, non-material terms may also be specified in a prenup. Hollywood stars may provide vivid examples. For instance, Katie Holmes and Tom Cruise’s prenuptial agreement stipulated that Holmes would support Cruise’s passion for Scientology and that she was prohibited from making negative statements on the subject. Madonna’s prenup with Guy Ritchie contained a separate section on her spiritual development, which stated that her husband should contribute to her spiritual growth and not interfere with her meditation.

Indeed, it is allowed to prescribe the specifics of the relationship between spouses in detail. If you can prove that the agreement terms have been violated, your spouse will be held liable.

However, Indiana prenuptial agreement law does not give freedom to specify child support terms in it (IN Code § 31-11-3-5(b)).

What Is the Enforceability of a Prenup in a Community Property State?

A divorce with a prenup enables the couple to terminate their relations on their own terms. For example, in community property states, the court aims to divide all assets and property acquired jointly during the marriage (community property) evenly so that each spouse gets an equal share. However, the judge can make another decision for compelling reasons. A prenuptial agreement is one of the compelling reasons that can be prioritized over community property principles.

Indiana is not a community property state, so marital property is divided equitably. Still, the couple’s wishes specified in a prenup will guide the judge in their decisions.

Many people wonder, “Does a prenup protect future assets?” Actually, yes, a prenuptial agreement can protect not only property each party already owns before the marriage but also assets that the couple will acquire during their marital life. However, such provisions must be carefully thought through and spelled out to eliminate any misunderstandings and inconsistencies. That’s why it is reasonable to get proper legal help and adhere to legal guidelines when creating a prenuptial agreement.

So, what is a prenup? It is an important tool that enables spouses to define their rights and obligations concerning property and finances. It has advantages and disadvantages, and all aspects should be carefully considered before entering into it. Indeed, you should be aware of any potential risks and negative consequences. In any case, it is important to be open to dialogue, trust, and mutual understanding in family relationships and to discuss the issue, considering your personal values, needs, and beliefs. Whatever the decision, the key goal is to maintain harmony and understanding in your marriage.