Tips about Prenuptial Agreements
Nothing can take the heat out of a romance faster than the words, “Prenuptial Agreement.” However, in the long run, there is nothing quite like the comfort of knowing you have planned for the future and are protected. The trouble for most, when it comes to prenuptial agreements, is that there is a lack of understanding as to what they can and cannot do.
It is a commonly held belief that only the fabulously wealthy need a prenuptial agreement; however, that is far from the truth. Sure Donald Trump has millions he may want to protect, but there are plenty of people that have worked for years building a nest egg, a retirement account or purchasing a home that they want to make sure is protected. Perhaps most importantly, a prenuptial does not mean the parties are ever planning to divorce and it may be nice to know before the wedding if your spouse refuses to sign such an agreement.
If you have assets you acquired before your marriage, have children from a prior marriage, expect to acquire any money or property, have a business that is about to take off, own real estate, want to address alimony or are expecting any other kind of financial windfall, you could benefit from a prenuptial agreement. By being aware of a few basic concepts, you can better understand the workings of prenuptial agreements and when you may benefit from one. If you have the protection of a prenuptial agreement, you can control where your property goes and avoid having a judge or court determine how property that may arguably be separate is divided.
First, what can a prenuptial agreement protect? That is largely dependent upon the parties and how they want to structure an agreement. It is quite common for the parties to look at several factors when putting together a prenuptial agreement. Initially, the parties may look at the present time to determine what they each own and, perhaps what, if anything, they may have acquired together during their relationship. Frequently, a prenuptial agreement will identify all of the parties’ separate property and set out that any identified property shall remain separate should the parties divorce. The parties can also take advantage of the process to address how they will treat property acquired after they are married and how it will be treated in the event of a divorce. As the parties work through the agreement process, they largely have the ability to treat property in any fashion upon which they can agree.
A second area that the parties will want to address is how property acquired after the marriage will be treated. A common approach is to set out that any property acquired entirely by one spouse through their own efforts, is their separate property, regardless of use during the marriage. The parties may also set out that any property acquired during the marriage be treated as marital property subject to some sort of division under the applicable laws of the appropriate jurisdiction, or upon a schedule determined by the parties, should they divorce. As prenuptial agreements are very unique to the parties, the specific content of a prenuptial agreement is dependent on the particular assets of the parties and how they determine to address them. On this note, beware of the attorney who offers or suggests a form prenuptial agreement, a “one size fits all.” These can only offer false security and ensure problems down the road.
It is also possible for the parties to address things such as permanent or temporary spousal support following any separation. However the parties cannot waive child support as, regardless of their intent or desires, the state will allow and set a child support obligation to make sure any children are adequately cared for; however, the parties can agree to excess child support or responsibility for college expenses. It is also possible for the parties to agree upon custodial arrangements.
For a prenuptial agreement to be bona fide, there are certain requirements that must be met, though these requirements may vary from state to state. Even still, there are several requirements that are applicable in most states. The first is that the agreement be formally executed. In laymen’s terms, this means that the prenuptial agreement jotted down on the back of a napkin and initialed by the parties is not worth the paper it is written on. In most states, both parties must have separate legal representation to advise them of their rights and to review the agreement. It is also quite common for both parties to be required to make a full and complete financial disclosure so the other party can understand what they may be giving up. Most importantly, the agreement must be signed in a formal fashion with witnesses and perhaps a Notary Public. It is also a good idea to execute more than one copy of the prenuptial agreement with each spouse and a neutral party keeping a copy as well. Many would be surprised at the number of people who go through the emotional rollercoaster ride of executing a prenuptial agreement then over the years, losing the agreement, being unable to locate it when they need it. Keep a copy in a safe place.
Ultimately, the manner that is best suited to starting the process of formulating a prenuptial agreement is to have a meeting with a qualified and experienced divorce attorney. Be prepared to identify the property you hold, property you may be acquiring, you earnings and other issues relevant to your present and potential financial position.
After you have an understanding of the issues relevant to the prenuptial agreement you will want to approach the issue with your future spouse. This is perhaps the most case specific part of the process; however, there is one rule that generally applies. The earlier in your relationship you broach the subject, the better. You do not want to bring up the subject for the first time in the days before your wedding. This can cause a host of problems such as a coercion claim on the part of your future spouse, not to mention that you may suddenly find yourself without a fianc�©e as your wedding approaches.
Most importantly, be honest and be fair; however, remember, when a prenuptial agreement is being drafted, the majority of the time one party has assets that are being protected and one spouse is giving up a claim to this property. With this being the case, it is frequently a reality that one party has everything to lose and one has everything to gain from a challenge to the agreement. Your attorney can address certain techniques and approaches to protect you from this scenario; however, challenges to prenuptial agreements are something you should be prepared to deal with. You also want to avoid dealing with frivolous issues such as religious preferences or personal issues such as requirements for hair style or weight gain. If such provisions are included in a prenuptial agreement and the agreement is challenged, you run the risk of having the entire agreement voided.
It is common place for the agreement to state that the consideration for the entire agreement is the marriage of the parties, meaning that for the agreement to be valid, you must get married. No marriage, no agreement. As well, after the agreement is signed and you are married, after some time, you may want to consider a review and revision. For instance, if certain a certain amount of alimony was agreed to, or certain property was addressed in a certain manner, after a period of marriage, you may want to revise the agreement to be more generous. As well, it is also common place to put in a “termination clause” or “sunset provision” that calls for the expiration of the agreement if a set amount of time passes without the agreement coming into effect.
This article is not offered as, nor is it to be construed, as legal advice, nor does it create any relationship, attorney/client or other, between the author and the reader. To obtain any legal advice, consult an attorney licensed to practice law in your state.
