One of the most common concerns before marriage or moving in together is debt: loans, overdrafts, business debts or debts a partner may build up in the future. A prenup can settle this between the partners, but it is important to understand its limits too.
What the agreement can set out between partners
- Debts each of you brought into the relationship remain that person’s responsibility and are not shared if the relationship ends.
- Debts one of you takes on in the future, for example in a private business, are that person’s responsibility alone.
- How the mortgage on a shared home is divided, and what happens if one of you paid more than the other.
- How the division of property is calculated when there are debts as well as assets.
What the agreement does not change
A prenup mainly governs the relationship between the partners themselves. It does not cancel obligations you have signed towards third parties. For example, if you both signed a mortgage or a loan, or if one of you guaranteed the other’s debt, the bank can usually turn to both of you, even if you agreed otherwise between yourselves. In that case the agreement can set out who should ultimately bear the payment and when one partner can claim reimbursement from the other.
Practical steps
- List existing debts in the agreement, such as loans, a mortgage or business debts.
- Think carefully before signing as a guarantor or co-borrower.
- Keep business accounts separate from household accounts.
- Update the agreement after a significant change, such as opening a business or taking a large loan.
Business owners may also want to read Prenups When One Partner Owns a Business or Company.
Next steps
Every couple’s situation is different, so the agreement should be built around yours. At Paz Israel & Co. Law Office we will review your assets, debts and plans with you, and explain what the agreement can and cannot achieve. To learn more, see our prenuptial agreement lawyer page, or contact us to arrange a meeting in Tel Aviv, Jerusalem or Modi’in.
This article provides general information about Israeli law and is not legal advice or a substitute for reviewing your specific circumstances.