A prenuptial agreement, or antenuptial agreement, is a legal contract entered into by two people before they marry. These agreements can be particularly important for a physician because in the unfortunate event of a future divorce, a prenuptial agreement can be a vital part of protecting your practice and your future income. When you consider that between 40 and 50 percent of first marriages end in divorce, and that number gets higher with each successive marriage, it makes sense to consider the financial ramifications of divorce in advance. For a doctor getting married after establishing a lucrative career, the benefits of a prenuptial agreement cannot be overstated.
Without a prenuptial agreement, you will be subject to divorce law in Minnesota, which provides for a “fair and equitable distribution of the debts and assets of the marriage.” In many situations, your medical practice will be considered an asset of the marriage, which could result in a significant cash distribution to your ex-spouse for their “share” of your medical practice. You may also be required to pay spousal maintenance, or alimony, to your spouse, which will have an impact on your earnings and potentially your practice. For these reasons alone, it is a good idea for doctors to strongly consider a prenuptial agreement as part of the wedding planning process.
Having a well drafted prenuptial agreement in place can also prevent lengthy litigation. Getting divorced is a difficult and emotional process no matter what, but a prenuptial agreement can provide a roadmap for addressing property division in a fair and relatively easy manner.
It’s important to remember that there are things a prenuptial agreement can’t do. Child support and custody may not be addressed in a prenuptial agreement. It is important that both parties have a meaningful opportunity to consult with an attorney. An agreement has to be fair – a court is less likely to enforce an agreement it deems to be so one-sided as to be unreasonable or unconscionable. Finally, don’t wait until the last minute to get started. A prenuptial agreement that is executed in the weeks or even days before the wedding may be struck down by a court for being coercive.
This information is general in nature and should not be construed as tax or legal advice.