5 times it is wise to have a prenuptial agreement

Prenuptial agreements, also known as prenups and premarital agreements, serve as a legal contract that guides the distribution of assets in the event of divorce. This type of document can address whether or not either party can receive spousal maintenance, death benefits and can also guide the resolution of other issues that may arise during the divorce. Although able to handle a wide variety of potential issues, there is one notable exception. Indiana state law, like many other states in our country, does not allow for the use of a premarital agreement to address child support or child custody matters. These are separate issues to be resolved during a divorce proceeding if necessary.

Benefits of premarital agreements

Couples may wonder whether or not they need a premarital agreement. Although a personal choice that some may prefer to have in place, while others may not, there are some instances where use of these legal documents is wise.

Situations that warrant a premarital agreement include:

• Wealth or debt. Those who enter the marriage with wealth or debt like student loans may want to take action to protect that wealth or be shielded from taking on a percentage of the debt. Although there are examples where courts in Indiana have awarded more than 80% of marital property to one party in some precedent divorce cases, this is not usual. Instead, it is wise to protect your interests in this situation with a prenup.
• Business interests. Those who own their own business may use a premarital agreement to protect the business in the event of a divorce. This can help to shield it from the divorce process and mitigate the risk of the divorce having a direct impact on business operations.
• Second marriage. Those with children from a previous relationship may want to use a prenup to protect their children’s inheritance rights. Otherwise, assets could go to the spouse and not to the children.
• Ownership of a Home or Gifting. When one party owns a home prior to marriage or intends to receive gifts from relatives during the marriage.
• Certain Retirement. Certain Retirement in Indiana is subject to 10- or 20-year vesting laws as well as when stock options may be part of a retirement package. These specific retirement plans could be a reason to consider a premarital agreement.

These are just a few options that could lead to the need for a prenup.

When does a prenup go into effect?

At the time of the marriage. The court should receive a copy of this document if a filing of divorce occurs. If the party filing for the divorce fails to present this document, the party who receives the Petition may file a response to alert the Court of the presence of a premarital agreement.

Indiana state law and legal requirements for a premarital agreement

Indiana adopted the Uniform Premarital Agreement Act (UPAA) to help provide consistency within Indiana as well as between other states. This law provides guidance on how to draft an enforceable and valid prenuptial agreement. To enforce this agreement, both parties must enter without duress and have access to independent legal counsel to review the proposed document and discuss its impact on each party. The document must be in writing and signed by both parties.