How a Prenuptial Agreement Can Protect Marital Assets

Prenuptial Agreement Can Protect Marital Assets

Couples often retain matrimonial attorneys to create prenuptial agreements (prenups) for the purpose of protecting their separate assets. But have you considered how a prenup can also protect your marital assets?

Marital assets are those acquired by a couple during a marriage, while separate assets are those that each individual acquired prior to the marriage or inherited or received as a gift from a third party during the marriage. Whereas a prenup can ensure that separate assets will not be subject to division during the divorce, it can also address the division of assets acquired during the marriage, allowing couples to determine in advance how those assets will be defined and how they will be divided when the marriage ends.

Will You and Your Spouse Use Marital Assets to Pay for Pre-Marital Obligations?

In the event of a divorce, your marital assets and debt would be divided equitably between you and your spouse. But what about the money you've paid toward pre-marital debts or the funds from your joint account that your spouse used to pay spousal support and child support obligations from their prior marriage?

People often enter marriages with prior financial obligations that will continue for the foreseeable future. These debts and expenses are separate from the marital debts, yet the couple will use joint marital assets or income earned during the marriage to pay for them.

With a prenuptial agreement lawyer, you can create an agreement that creates clarity and accounts for these expenses and any others that only benefit one spouse.

You and your spouse may enter into the marriage with any of the following financial obligations:

  • Spousal support that one spouse must pay to an ex-husband or ex-wife
  • Child support obligations for children with a past partner
  • Credit card debt acquired before the marriage
  • Student loan debt from before the marriage
  • Mortgage and other costs for a home purchased before the marriage

Aside from your debts, you'll likely also use marital assets to make investments that may ultimately benefit just one of you should the marriage end, such as tuition expenses to obtain a graduate degree or investment made into a new business. Creating a prenuptial agreement that addresses these potential future investments and specifies how the spouse who won’t benefit from the investment will be repaid is one way to reduce conflict later. These repayments are commonly referred to as “marital credits.”   

Marital credits often require one spouse to repay the other an amount equal to 50% of what was t h paid toward non-marital obligations during the marriage.

For example, say your spouse brings $50,000 of student loan debt into the marriage, and you pay off the debt using marital assets. Upon divorce, your spouse would owe you $25,000 in marital property credits.

Your prenuptial agreement lawyer can help you consider what's important to you and structure your prenup to reflect both of your wishes.

Work with an Experienced Family Lawyer to Prepare Your Prenuptial Agreement

Discussing how you and your spouse will handle pre-marital obligations can help you enter your marriage with peace of mind and confidence in the future. Work with a prenuptial agreement lawyer who understands your unique needs and financial situation. Contact Vacca Family Law Group at 212-768-1115 today for a free consultation to discuss the details of your situation and explore your options for a prenuptial agreement that suits you and your soon-to-be spouse.