Whether you are entering a marriage, already married, or in the process of separating or divorce, there are a few agreements that can help protect your finances.

The type of agreement you choose can depend on where you are in your relationship, but they all can foster a shared understanding of finances and the impacts of decisions on your future.

The following are the three agreements – prenuptial agreements, postnuptial agreements, and marital settlement agreements – and what should be considered before entering into each.

Prenuptial Agreements

Prenuptial agreements are entered into prior to marriage. They can be used to determine some or all financial aspects in the event of divorce, and/or death, and/or any other event written into the agreement.

While some prenuptial agreements may only address how to handle something specific, such as a home, others may address all of the assets, debts and/or alimony.

Prenuptial agreements should invite thoughtful and productive conversation about finances and encourage parties to be honest about what they currently have, how they wish for it to be handled, and their plans and expectations for the future.

Prenuptial agreements allow individuals to enter a marriage with confidence about their financial future. If circumstances change later in life, a couple can revisit the terms of their prenuptial agreement and make changes by mutual agreement.

Prenuptial agreements can limit what issues are contested in the event of divorce, and alleviate contested litigation about what each party is entitled to in the event of divorce. However, as with any agreement, a person may contest it’s validity. Therefore, it is important to seek legal counsel prior to entering into any agreement, including a prenuptial agreement.

Postnuptial Agreements

A postnuptial agreement can serve several functions.

A postnuptial agreement may serve the same purpose as a prenuptial agreement – the main difference being the timing in which the agreement is executed. A postnuptial agreement is signed after the couple is married.

If a couple did not sign a prenuptial agreement before their marriage, then they may sign a similar agreement at any point after the marriage. It may define what will happen with a specific asset or all of the assets and alimony in the event of the death or divorce of a party, with the hope and expectation that the parties will continue to live a long happy life together. It may be signed shortly after the marriage, or years later.

Sometimes an event sparks the desire for a postnuptial agreement, such as acquiring significant assets, starting a business, writing a book, receiving a patent, incurring significant debt, a health issue, differing priorities in terms of work, finance or spending, or lack of trust.

Alternatively, a postnuptial agreement may serve as a separation agreement or marital settlement agreement in that it is a couple’s final agreement that spells out what they will each have and be entitled to going forward, with the expectation that they are going to lead separate lives – although they may or may not immediately pursue a divorce.

Like a prenuptial agreement, a postnuptial agreement can be amended at any time by mutual agreement.

Marital Settlement Agreements

A martial settlement agreement, also known as a property settlement agreement, is an agreement created in the event of a divorce or separation.

In a marital settlement agreement, a couple can resolve all issues arising out of their marriage, including but not limited to, custody, child support, alimony and distribution of assets and debt – thus avoiding costly contested litigation.

The benefits of entering into a marital settlement agreement, besides avoiding costly and lengthy protracted litigation, is that a couple gets to have control over the outcome of their lives, rather than leaving it to a judge to decide, and they can be as creative in their solution as they want to be, and are not bound by the limits of what a judge is empowered to award. If they sign a marital settlement agreement, the provisions they agree to are enforceable.

Even when couples sign a marital settlement agreement, they still need to go to court to get their divorce. However, it is a short hearing – usually approximately 15 minutes. At the hearing, the court may review the agreement, and will usually want to approve any provisions related to custody and child support of minor children.

Which Agreement is Right for You?

Where you are in life can affect which agreement is most suitable for you. Talk to an experienced attorney to figure out which is best for you, and make sure to review any agreement you sign with an attorney prior to signing it.

Erin Kopelman is a divorce attorney who handles cases involving domestic relations and family law. For more information, contact Erin at elkopelman@lerchearly.com.