Who should have a premarital agreement?

The simple answer is anybody who comes to the marriage with something to protect when the marriage terminates. The general categories are people with children from a prior relationship, significant family assets, or people who own a business which comprises a major source of income.

If there are children from a prior relationship, they may not inherit when their parent dies without a premarital agreement. The laws of inheritance give preference to a surviving spouse. Even if a will exists, the law still gives preference to a spouse. The best way to make sure that children can inherit is to write a prenuptial agreement. When one spouse owns a business or a portion of the business in which they receive significant income, it may be desirable to make certain that the new spouse can't receive a portion of the business in a divorce. It can be devastating to the business to have a person own a business when they are not qualified to run the business. It can also be very difficult for one spouse to suddenly work for an ex-spouse.

Premarital agreements can successfully protect against these problems and others.

What is a pre-nuptial agreement?

A pre-nuptial agreement is an agreement between a couple who intend to get married which determines financial obligations upon termination of the marriage. All marriages terminate either by divorce or by death. A pre-nuptial agreement should determine rights and obligations for both methods of termination. A pre-nuptial agreement must be fair at the time of creation and fair at the time of enforcement. Fairness at the time of creation means that both parties must make a full and fair disclosure of their income, assets, expenses, and liabilities. Fairness at the time of enforcement requires a fair distribution of income and assets at the time of termination. This doesn't mean an equal distribution but one party can't be left destitute. As parties can't contract away children's rights, a pre-nuptial agreement can't determine child custody or support issues.