Purposes For Prenuptial Agreements

1. Allow each spouse to keep their own separate property.

One of the purposes for prenuptial agreements is to make sure that a spouse's separate property owned before marriage remains separate property after marriage. In other words, the property will remain separate regardless of any new developments that might otherwise make the property community property.

Many spouses who owned businesses will want to avoid the difficulties involved in apportioning the business in the event of any dissolution. In that case, under the prenuptial agreement, the business will remain entirely the separate property of the owning spouse, regardless of any actions taken after marriage.

2. Prevent the creation of community property.

The prenuptial agreement may prevent the creation of community property during the marriage. In the agreement, each party's earnings during marriage and before separation, and any items acquired by the party with those earnings, will be his or her separate property.

For example, should a spouse get a loan during marriage to fund a separate business, under current law, the loan proceeds from it will be community property. This means that the business will have both separate and community property interests.

3. Waive or limit spousal support.

Another of the purposes for prenuptial agreements, under new legislation in 2002, the parties may agree to waive or limit spousal support (alimony).

4. Other reasons.

A prenuptial agreement may allow a spouse to plan for certain contingencies should they die. For example, children from previous marriages may be provided for in a prenuptial agreement. In the event of the others death, certain property may be set aside for the children from the previous relationship.

Property of one spouse may be protected from the creditors of the other on debts incurred by the other during marriage. As long as creditors are given proper notice, a prenuptial agreement that provides that each spouse's earnings and acquisitions during marriage will be his or her separate property may prevent creditors of one spouse from taking the earnings and acquisitions of the other.