What is a Prenup?
We have all heard of prenups, but you may not know what a prenup actually does or what you can use a prenup for.
Read on to learn more.
What is a Prenup?
A prenup is also called a “prenuptial agreement” or a”premarital agreement.” It allows future spouses to decide and determine what will happen to their finances at the end of their marriage — whether that marriage ends by death or by divorce. Today, we will focus on how prenups work in the divorce context. A premarital agreement allows future spouses to delineate both (1) how they will divide property and (2) whether there will be any alimony and, if so, how much and for how long. Otherwise put, Connecticut prenups essentially allow future spouses to “opt out” of Connecticut’s default approach to alimony and property division, and instead “opt in” to a design of their own making.
What is the Default for Alimony and Property Division in Connecticut?
Many engaged people and married people — probably really most engaged and married people — do not know even what Connecticut’s default approach to alimony and property division is.
That means that many, many people marry without knowing what they have automatically agreed to should they divorce. The first reason a prenup is such a good idea is that you’ll learn and understand the way things work. The second is that a prenup it gives you and your future spouse the opportunity to choose something different instead.
Prenups and Alimony
Connecticut courts have the authority to award alimony for a period of time or for a lifetime. There is no alimony formula, rather the court weighs a series of factors in making an alimony determination. Many people enter into premarital agreements because they prefer to predetermine whether and how alimony will work.
Prenups and Property Division
Similarly, there’s no cut and dry rule in Connecticut for how property and debts will be divided in a divorce. Instead, the court weights a series of factors to help it decide what’s equitable. Notably, Connecticut is an “all property” state, which means that divorce courts have broad authority to award marital property to either spouse, regardless of:
- how it is titled
- when it was acquired
- or whether it was received as a gift or inheritance.
In theory, this means that everything owned by both spouses (and all debts owned by both spouses) is “fair game” or subject to division in a Connecticut divorce.
Many people who enter into premarital agreements prefer to decide what property will be divided and how. For example, they might decide that an asset a spouse acquired prior to marriage remains the property of that spouse. And, they might also decide that property they bought together during the marriage might be divided equally in the event of a divorce.
The critical takeaway is that a prenup allows you and your fiance to decide how you want things to work.
Or, to start making a plan for your prenup, reach out. Our first step at Freed Marcroft, the Goals & Planning Conference, is designed to unveil your true goals. We analyze those goals and present you with recommendations and options to move forward.