HOW CAN A PRENUPTIAL AGREEMENT PROTECT AGAINST DEBT?
When a couple chooses to create a prenuptial agreement, they can use it to create a number of protections for each party. In some cases, these protections take effect as soon as the couple finalizes the marriage. One of the most useful protections that a prenuptial agreement offers couples is protection from each other’s debt.
Prenuptial agreements allow each spouse to determine which assets and liabilities qualify as marital property. Without taking steps to prevent commingling property, each spouse may become liable for the personal debt the other brings into the marriage, because debt is considered property. This might look like a creditor pursuing the property of one spouse to satisfy the debt of the other.
With some careful planning, a prenuptial agreement can allow both parties to protect against the debt of the other. In fact, a spouse can set aside certain debts as solely his or her property, and also set aside certain assets to protect them from potential divorce or estate planning complications that may arise if one party passes away and the other remarries. This is especially useful if one party owns a business or plans to start a business.
If you and your future spouse want to avoid many of the tensions that trouble marriages, especially if one or both of you carry significant debt, be sure to carefully consider all your options and create an agreement that protects and supports you both. An experienced attorney can help walk you through the process and ensure that your agreement can withstand scrutiny in court, keeping your rights secure.
Source: FindLaw, “Pros and Cons: Premarital Agreements (“Prenuptials”),” accessed Feb. 07, 2018