• 09
  • June
    2010

The previous post discussed the difference between marital property and separate property. Its purpose was to provide the reader with a basic understanding of what property is subject to division upon divorce and what property remains undivided. The next few posts will take it one step further by examining asset protection strategies designed to help a person protect their complex property, such as a business, from the equitable division process.

One especially effective asset protection tool is the prenuptial agreement.

What is a prenuptial agreement?

In very basic terms, a prenuptial agreement is a contract entered into by a future husband and wife prior to their marriage that clearly delineates their respective expectations and rights in the event of a divorce. Important legal matters, such as spousal support and property division, are essentially settled beforehand and the need for any sort of prolonged legal battle is avoided.

In terms of property, a prenuptial agreement plainly defines what constitutes marital property and enables the couple to decide how this marital property is to be divided.

Are there are certain requirements that must be satisfied in order for a prenuptial agreement to be considered valid and binding?

Yes. Generally speaking, any prenuptial agreement must meet the following requirements:

• It must be in writing (oral prenuptial agreements are not okay)
• It must be signed by both parties before a witness
• It must be signed voluntarily and free of coercion
• It must disclose all assets owned by both parties
• It must not be unconscionable (provide your spouse with only a fraction of significant assets)

Isn't a prenuptial agreement reserved for the rich, famous and powerful?

No. A prenuptial agreement is a relatively inexpensive yet incredibly effective method of protecting a business or other complex assets. Unfortunately, many people mistakenly believe that prenuptial agreements are only for those with great wealth. This is simply not true. People from all walks of life are suitable candidates for prenuptial agreements.

The next post will examine other asset protection strategies that can be undertaken to protect a business.

Related Resources:
  
• How to Protect Your Business in a Divorce (Inc.com)