The prenuptial agreement is a written contract between spouses, (preferably prepared before marriage, but can be prepared afterwards as well) that determines what financial assets (at present but also that may be accumulated in the future), belongs to whom, and how they will be divided at the end of the marriage (death or divorce). Spouses who do not have such an agreement will be subject to the provisions of the law.
The law stipulates that at the end of the marriage (death/divorce) each spouse is entitled to half of the assets, apart from:
Assets each individual owned prior to the marriage
Gifts and inheritance one received during the marriage
Compensation paid to one of the spouses due to a physical injury
This agreement is especially important to have when one is thinking of remarrying when s/he has assets of his/her own, such as a house that both parties plan to live in.
The prenuptial agreement must be in writing, signed by both spouses, and approved by the court (either secular or rabbinical) if prepared in proximity to the marriage or after the marriage.
A prenuptial agreement prepared for couples that are not yet planning to get married or their marriage date has not yet been decided, can also be confirmed by a notary or a marriage registrar.
Common Law Spouses:
Couples who cannot marry or are not planning on getting married should consider preparing a financial agreement that will define the ownership of their assets.
According to court rulings, in certain circumstances common law spouses may be entitled to a share in each other’s assets, in the event of the end of the relationship/death.
If the couple is managing a joint household, live together, with the intention of living a joint life (depending on various circumstances such as the duration of the relationship, the degree of income sharing, financial dependence of one party on the other, etc.), it is possible that their property will be considered jointly owned. Consequently, to avoid this, it is recommended to have a financial agreement in place.
A financial agreement between common law spouses does not need to be confirmed by the court (although highly recommended).
A prenuptial agreement (or a financial agreement), although a sensitive topic to discuss, is most recommended because it protects the relationship by reducing future disputes regarding the assets and enables the couple to handle their assets as they see fit without worrying about future unknown consequences that their actions may cause.