Are you and your partner planning to get married soon? If so, then you might want to consider signing a prenuptial agreement. A prenuptial agreement, officially known as an antenuptial agreement in Minnesota, can help you decide how to divide not just your assets, but also your debts in the event of a divorce or separation.
Dividing debt with a prenup
When drafting your prenup, you and your partner will disclose all your existing debts. You will then set rules for assigning or dividing these separate liabilities in the event of a divorce.
You can also use a prenup to address any marital debts you might take on during your marriage. You can decide this based on several factors, including which person takes out the debt and what the purpose of the debt is. For instance, you might treat student loans differently than credit card debt.
It’s important to know whether debts are joint or separate before dividing them. Remember that debts or assets accumulated during your marriage are typically the joint responsibility of both you and your partner, while any incurred before marriage are often separate.
Dividing debt without a prenup
Without a prenup, the state divides debt the same way as it divides assets – with an equitable distribution approach. This means that the court decides on the division of property in a fair and just way. For the court to fairly divide the debt, it considers various factors including:
- The length of the marriage, any prior marriages, and the age and health of each spouse
- Occupation and sources of income of each spouse, as well as their vocational skills, employability, estate, liabilities and needs
- The possibility for a spouse to acquire capital assets and income in the future
- The contribution of each spouse in the acquisition, preservation, depreciation or appreciation of marital property
- The marital and financial contributions of each spouse
These decisions may or may not align with what you would like, so to keep control over the division of debts in a divorce, consider signing a prenuptial agreement. Having this document will give you peace of mind in the event that your marriage ends.