Understanding Marital Agreements

• Marital agreements can help couples define financial expectations and establish a framework for how assets may be treated in the future
• These agreements may help protect premarital assets as part of a broader wealth planning strategy
• Because marital agreements involve important legal and financial considerations, each party should approach the process thoughtfully and seek independent professional guidance

Marital agreements are often thought of only in the context of divorce, but they can play a much broader role in thoughtful wealth and estate planning. For individuals and families with significant assets, business interests, prior family commitments, or anticipated inheritances, these agreements can help create clarity around financial expectations, preserve family wealth, and align a couple’s planning with their long-term goals. Rather than anticipating the failure of a relationship, couples may view these agreements as an opportunity to establish a fair framework for the future while their partnership is strong.

Prenuptial/Premarital Agreement: Contractual agreement entered into prior to marriage. This defines how the marital estate will be divided in divorce, including what property is included for division, as well as estate and support rights.

Postnuptial/Postmarital Agreement: Contractual agreement entered into after the parties are married and prior to divorce proceedings. Can be entered into in order to document how happily married parties would like assets to be divided and spousal rights protected, as well as legal issues resolved if divorce occurs or upon death.

Property Settlement Agreement: Contractual agreement that divides the marital estate and handles support, alimony, and dependent child issues under the divorce code.

Cohabitation Agreement: Contractual agreement made irrespective of a marriage by two people who have chosen to live together.

A marital agreement can help to protect any assets that you’ve accumulated prior to marriage, along with the growth on that property, along with any anticipated inheritance. In this case, the assets are considered nonmarital property for the purposes of providing support or an inheritance for children of a previous marriage.

If you own a family business and want to make sure ownership stays within a bloodline, then including it in a marital agreement can maintain its identity as nonmarital property. This can be used in addition to other succession planning strategies for transitioning your family business. 

It may be prudent for both spouses to create a marital agreement to establish the amount that the economically lesser spouse will receive in the event of death or divorce, particularly if the wealthier spouse’s assets are already tied up in trusts or family assets.

Along with certain types of trust agreements, marital agreements may also provide a way to manage expectations and limit what your spouse will receive through your estate plan. .

Rather than leave the decision up to a third party, such as the state or court system,  you can use a marital agreement to establish what would happen to your assets in the case of divorce. 

• Each party should retain independent counsel
• Provide enough time for the marital agreement to be worked through prior to the date of marriage
• Be prepared to disclose all tax returns, assets, obligations, and liabilities in good faith
• State law will determine what rights a party can waive as part of these agreements (such as spousal support)
• These agreements should be considered the “floor” as to what one party is obligated to the other
• The agreements can be modified in the future to reflect changing circumstances, including being dissolved by mutual agreement

Marital agreements can be an important part of a broader wealth and estate planning strategy, helping couples define expectations, protect family assets, and plan for future transitions with greater confidence. Because these agreements involve personal, financial, and legal considerations, it is important to approach them thoughtfully and with guidance from independent professional advisors.

Learn more about how a comprehensive approach to wealth planning can help protect what matters most to you and your family.

This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought.

There is no assurance that any investment, financial, or estate planning strategy will be successful. Estate planning strategies require consideration of the suitability based on individual objectives, financial situation, and particular needs.

Wilmington Trust is not authorized to and does not provide legal, accounting, or tax advice. Our advice and recommendations provided to you are illustrative only and subject to the opinions and advice of your own attorney, tax advisor, or other professional advisor.

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