The National Directory of Certified Public Accountants

Ask A CPA - Divorce & Marriage Issues

What Is A Prenuptial Agreement ?

You or your spouse may want to formulate and sign a premarital agreement, sometimes called a prenuptial agreement. Generally, premarital agreements define each of the partner's separate properties that are brought into the marriage and describe the financial ownership intentions after the wedding. Premarital agreements are usually done among previously married partners who want to avoid a repeat of a financially bitter divorce. Premarital agreements may contain a limitation or waiver of alimony when and if you ever divorce. It may include a provision under which one spouse gives up all rights or limits their rights to the other's estate. Premarital agreements are advisable if one partner is much wealthier than the other and is concerned with the protection of assets should the marriage dissolve. If a divorce occurs later, the agreement usually states that a transfer, or the promise of a transfer, of a stipulated amount of property from the wealthier spouse to the other. The transfer may either be outright, or in a trust in exchange for a release of all claims the other may have for support or against the transferor's estate. You should also consider signing a prenuptial agreement if you or your future spouse have children from a previous marriage and are concerned about protecting the children's financial interest in your estate. The agreements are also commonly used if one of the two are involved in a business.

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