How Does a Prenuptial Agreement Affect Debt Division?

 Posted on July 31, 2024 in Prenuptial and Postnuptial Agreements

Spouses who get divorced are entitled to marital property, which are assets that were acquired by either party during the marriage (with some exceptions). It is common for a spouse to experience a financial boost after being awarded his or her share of the marital property. Marital debt, however, which is also divided between both parties, can counteract that financial benefit.

In the debt division process, a judge often saddles both spouses with financial obligations. This can significantly affect the economic future of both parties, in ways that one or both spouses may feel is unfair. Some couples therefore hire an Illinois family law attorney to draft a prenuptial agreement that determines in advance how debt will be divided in a divorce.

What Is a Prenuptial Agreement?

A prenuptial agreement, also known as a premarital agreement, is a legally binding document signed before marriage that outlines each party’s financial rights and responsibilities in the event of a divorce. It contains provisions for:

• Properties and assets: How real estate, businesses, investments, retirement accounts, cars, and other assets will be divided in a divorce

• Debts and liabilities: How debts like student loans, mortgages, and credit card debt will be divided in a divorce

• Spousal maintenance: Whether or not a spouse will be entitled to alimony

• Other provisions as necessary, such as protections for inheritances, gifts, and estate plans

Once signed by both parties, a prenuptial agreement takes effect when the couple gets married.

How Is Debt Divided?

Marital debt is defined by three characteristics:

• It was acquired during the marriage.

• It benefited both spouses.

• It existed at the time of divorce.

Like marital property, marital debt is supposed to be divided fairly, not equally. Illinois law leaves it up to the courts to decide what is fair and how to distribute financial responsibilities incurred during the marriage.

For example, if one spouse accrued student loans from attending university before marriage, a judge might decide to assign a portion of those loans to the other spouse. The court might reason that since the first spouse graduated with a degree that helped him or her secure employment that supported the household, the other spouse benefited from that education and therefore is partly responsible for that debt.

How Does a Prenuptial Agreement Affect Debt Division?

A prenuptial agreement lays out how debt will be divided in a divorce. A prenup could, therefore, contain a provision that a spouse’s student loans will remain separate debt and not be divided if the marriage is dissolved. As another example, a spouse might not wish to be saddled with medical debt for an injury that the other spouse suffered before the marriage. He or she may therefore ask for it to be stipulated in the prenuptial agreement as separate debt.

Contact a DuPage County, IL Prenuptial Agreement Lawyer

Some couples shy away from prenuptial agreements because they find it uncomfortable to discuss the possibility that the marriage will end. However, signing an agreement can not only help the divorce process go quicker and smoother, but it can also protect your financial interests. At Davi Law Group, we will use our compassion and legal skills to help you draft a prenuptial agreement tailored to your needs. Call 630-657-5052 to schedule a free consultation with an excellent Wheaton, IL prenuptial agreement attorney today.