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Prenuptial Agreements: A Comprehensive Guide for All Couples

Learn everything you need to know about prenuptial agreements, how they protect your assets, and why they're valuable for couples with children, young couples, blended families, and those with significant assets.

Introduction

A prenuptial agreement (commonly called a 'prenup') is a legal contract created by two people before they marry that typically outlines how assets and debts will be divided in the event of divorce or death. While often associated with wealthy individuals protecting their fortunes, prenups serve many practical purposes for couples across various life situations. This document can help clarify financial rights and responsibilities, protect family businesses, shield one spouse from the other's debts, and establish clear guidelines for property division. Whether you're entering marriage with children from previous relationships, significant assets, or simply want clarity about your financial future together, understanding prenuptial agreements is an important step in building a secure foundation for your marriage.

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Key Things to Know

  1. 1

    Prenuptial agreements must be executed well before the wedding (at least 30 days is recommended) to avoid claims of coercion or duress.

  2. 2

    Both parties must provide complete and honest financial disclosure for the agreement to be valid.

  3. 3

    Each person should have their own independent legal counsel review the agreement before signing.

  4. 4

    Prenups cannot determine child custody or child support amounts, as these must be decided based on the best interests of the child at the time of divorce.

  5. 5

    The agreement should be reviewed and potentially updated after major life events such as the birth of children, significant inheritance, or substantial changes in financial circumstances.

  6. 6

    State laws vary regarding prenuptial agreements, so it's essential to work with an attorney familiar with the laws in your jurisdiction.

  7. 7

    A well-crafted prenup promotes financial transparency and communication, which can strengthen your relationship rather than undermine it.

  8. 8

    For blended families, a prenuptial agreement should work in conjunction with your estate plan to ensure children from previous relationships are protected.

Key decisions before you file

Before you file a Prenuptial Agreement in Vermont, a few decisions shape the document: which option to choose and what each one means. The Prenuptial Agreement guide walks through them.

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Vermont Requirements for Prenuptial Agreement

  • Voluntary Execution (15 V.S.A. § 751)

    The agreement must be entered into voluntarily by both parties, without coercion, duress, or undue influence. Each party must sign the agreement of their own free will.

  • Full Financial Disclosure (15 V.S.A. § 751)

    Both parties must provide full, fair, and reasonable disclosure of their financial assets, liabilities, income, and obligations prior to execution of the agreement.

  • Independent Legal Representation (Sanger v. Sanger, 170 Vt. 533 (1999))

    Each party should have the opportunity to consult with independent legal counsel of their own choosing before signing the agreement.

  • Reasonable Time for Review (Bassler v. Bassler, 156 Vt. 353 (1991))

    The agreement must be presented with reasonable time before the marriage for review and consideration, not immediately before the wedding.

  • Unconscionability Provision (15 V.S.A. § 751)

    The agreement must not be unconscionable at the time of execution or enforcement. Terms that are grossly unfair or one-sided may be deemed unenforceable.

  • Property Division (15 V.S.A. § 751)

    Clear identification and division of separate property (owned before marriage) and marital property (acquired during marriage) in the event of divorce.

  • Spousal Support/Alimony (15 V.S.A. § 752)

    Provisions regarding waiver, limitation, or specification of spousal maintenance/alimony in the event of divorce.

  • Debt Allocation (15 V.S.A. § 751)

    Specification of how premarital and marital debts will be handled during marriage and in the event of divorce.

  • Estate Rights (14 V.S.A. § 319)

    Provisions regarding inheritance rights, including waiver of elective share rights that would otherwise be available under Vermont law.

  • Business Interests Protection (15 V.S.A. § 751)

    Provisions protecting business interests, professional practices, or family businesses from division in divorce.

  • Retirement Benefits (Employee Retirement Income Security Act (ERISA))

    Provisions addressing division of retirement accounts, pensions, and other retirement benefits in compliance with ERISA and other federal laws.

  • Tax Considerations (Internal Revenue Code)

    Provisions addressing tax filing status, allocation of tax benefits, and tax consequences of property transfers in compliance with IRS regulations.

  • Choice of Law (15 V.S.A. § 751)

    Specification that Vermont law governs the agreement, regardless of where the parties may relocate in the future.

  • Sunset Provision (15 V.S.A. § 751)

    Optional clause specifying if and when certain provisions of the agreement expire or are modified based on the length of the marriage.

  • Modification and Amendment (15 V.S.A. § 751)

    Provisions specifying how the agreement may be modified or amended after marriage, requiring written consent of both parties.

  • Severability (Common Law Contract Principles)

    Provision stating that if any portion of the agreement is found invalid or unenforceable, the remainder of the agreement remains valid and enforceable.

  • Child Support and Custody (15 V.S.A. § 650)

    Acknowledgment that child support and custody matters cannot be predetermined in a prenuptial agreement as they are subject to court determination based on the best interests of the child.

  • Marital Home (15 V.S.A. § 751)

    Provisions regarding ownership, use, and disposition of the marital residence in the event of divorce.

  • Life Insurance (8 V.S.A. § 3709)

    Provisions regarding life insurance policies, including requirements to maintain certain beneficiary designations.

  • Equitable Distribution Compliance (15 V.S.A. § 751)

    The agreement must comply with Vermont's equitable distribution principles while allowing for contractual modifications that are fair and reasonable.

Frequently Asked Questions

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