Riley Wright: Should I Get A Prenuptial Before I Get Married?

A prenuptial agreement is a written contract created by two people before they are married. A prenuptial typically lists all of the property each person owns (as well as any debts) and specifies what each person’s property rights will be after the marriage. In some states, a prenuptial agreement is known as an “ante-nuptial agreement,” or in more modern terms, a “premarital agreement.” Sometimes the word “contract” is substituted for “agreement,” as in “prenuptial contract.” An agreement made during marriage, rather than before, is known as a “post-nuptial,” “post-marital,” or “marital” agreement. Contrary to popular opinion, prenuptial are not just for the rich while prenuptial are often used to protect the assets of a wealthy fiancé, couples of more modest means are increasingly turning to them for their own purposes. Here are some reasons that some people want a prenuptial:

• Pass separate property to children from prior marriages: A marrying couple with children from prior marriages may use a prenuptial to spell out what will happen to their property when they die, so that they can pass on separate property to their children and still provide for each other, if necessary. Without a prenuptial, a surviving spouse might have the right to claim a large portion of the other spouse’s property, leaving much less for the kids.

• Clarify financial rights: Couples with or without children, wealthy or not, may simply want to clarify their financial rights and responsibilities during marriage.

• Avoid arguments in case of divorce: Or they may want to avoid potential arguments if they ever divorce, by specifying in advance how their property will be divided, and whether or not either spouse will receive alimony. (A few states won’t allow a spouse to give up the right to alimony, however, and, in most others, a waiver of alimony will be scrutinized heavily and won’t be enforced if the spouse who is giving up alimony didn’t have a lawyer.)

If you don’t make a prenuptial agreement, your state’s laws determine who owns the property that you acquire during your marriage, as well as what happens to that property at divorce or death. (Property acquired during your marriage is known as either marital or community property, depending on your state.) State law may even have a say in what happens to some of the property you owned before you were married. Under the law, marriage is considered to be a contract between the marrying couple, and with that contract comes certain automatic property rights for each spouse. For example, in the absence of a prenuptial stating otherwise, a spouse usually has the right to:

• share ownership of property acquired during marriage, with the expectation that the property will be divided between the spouses in the event of a divorce or at death.

• incur debts during marriage that the other spouse may have to pay for, and

• share in the management and control of any marital or community property, sometimes including the right to sell it or give it away.
If these laws — called marital property, divorce, and probate laws — aren’t to your liking, it’s time to think about a prenuptial, which in most cases lets you decide for yourselves how your property should be handled

Making a Valid Prenuptial Agreement

As prenuptial agreements become more common, the law is becoming friendlier toward them. Traditionally, courts scrutinized prenups with a suspicious eye, because they almost always involved a waiver of legal and financial benefits by a less wealthy spouse and they were thought to encourage breakups. As divorce and remarriage have become more prevalent, and with more equality between the sexes, courts and legislatures are increasingly willing to uphold premarital agreements. Today, every state permits them, although a prenup that is judged unfair or otherwise fails to meet state requirements will still be set aside. However, because courts still look carefully at prenups, it is important that you negotiate and write up your agreement in a way that is clear, understandable, and legally sound. If you draft your own agreement, which we recommend, you’ll want to have separate lawyers review it and at least briefly advise you about it otherwise a court is much more likely to question its validity.

Things to know about prenuptial agreements

• The Basics: A prenuptial agreement is a private agreement between a couple signed before they get married which sets forth the division of their assets in the event of divorce or death. Each state has its own laws regarding the enforcement and validity of prenuptial agreements. Which state’s law to apply depends on where the marriage took place, where the parties live during the marriage and what law the agreement says to apply. Often, couples in this situation will seek out the laws of the state that will be most beneficial in carrying out the terms of the prenup.
• Fairness matters: In most states, the agreement has to be fair, the parties have to fully disclose their assets, and the parties each need their own attorney.
• Circumstances dictate fairness: The idea of fairness depends on the unique facts and circumstances surrounding each couple.
• Full disclosure is required: Typically, the parties also have to fully disclose their assets. That is not hard to do here since one can google each of the parties and find out their estimated net worth. But in many states it still needs to be set forth in the agreement. Also, some states look at each party’s expected inheritance.
• Think ahead: Presenting your intended with a prenup the week before the marriage is not good practice, and in some states could be used to overturn the prenup. For that reason, the idea of a prenup should be raised long before the marriage.
• Premarital assets are usually off limits: Prenups often state that any assets brought into the marriage remain that person’s separate property. A prenup could also state that any assets the couple earned during the marriage are marital property subject to division. Many clients find this approach fair and reasonable; however, each prenuptial agreement is tailored to the couple’s unique assets and the terms they agreed to.
• Setting the terms for alimony: In most instances, the agreement will either waive alimony or not address the topic. If alimony is waived, it means that one party cannot seek alimony from the other in the event of divorce.
• Till death do us part: Most prenups will allow each party to leave their separate property to whomever they want, while requiring some provisions for the surviving spouse.
• Children are off the table: A prenuptial agreement cannot provide for or limit child support or rights related to children. Courts and legislatures do not let couples bargain away the rights of their children.
A prenup establishes the property and financial rights of each spouse in the event of a divorce. So while no one is thinking about a divorce when they get married, about half of all marriages end up in divorce proceedings. So it’s often prudent to at least consider a prenuptial agreement.

Here Are Some Pros

• A prenuptial marriage agreement does not indicate that a couple is anticipating a divorce.
• Financial matters that need to be faced are examined.
• Prenuptial agreements can preserve family ties and inheritance.
• If your future spouse won’t sign a prenuptial marriage agreement, it may be best to discover this before the wedding.
• The financial well-being of children from a previous marriage can be protected.
• Personal and business assets accumulated before your marriage is protected.
• A prenup puts financial expectations out on the table before your wedding.
• A prenuptial marriage agreement spells out which assets a spouse may want to give to children or other family members in the event of death.
• In the event of a divorce, a prenuptial agreement eliminates battles over assets and finances.
Cons
• Some people look at creating a prenup as planning the divorce before planning the wedding.
• They are unromantic and can cause serious friction in the relationship.
• Prenups can give the appearance that there is a lack of trust between the partners.
• A prenuptial agreement could create resentment between spouses.
• A prenuptial marriage agreement makes it seem like there is a lack of a lifetime commitment to one another.
• Prenuptial marriage agreements can be set aside for failure to disclose all assets, or if there is evidence of fraud, duress, unfairness, or lack of representation at the time of signing the agreement.
There are numerous reasons for a prenuptial agreement. Below is a list of items commonly included in prenuptial agreements:
• Separate businesses
• Retirement benefits
• Income, deductions, and claims for filing your tax returns
• Management of household bills and expenses
• Management of joint bank accounts, if any
• Arrangement regarding investing in certain purchases or projects, like a house or business
• Management of credit card spending and payments
• Savings contributions
• Property distribution to the survivor, including life insurance, in the event of death
• Arranging putting one or the other through school
• Settlement of potential disagreements, such as using mediation or arbitration
Most common mistakes made by couples when executing a prenuptial agreement
• No Independent Legal Representation: Both parties must have independent and separate attorneys. Each attorney will make sure his/her client fully understands the prenuptial agreement and the signing is done voluntarily.
• Duress: If one party is pressured into signing the agreement or had no mental capacity to sign the agreement (such as been drunken or under the influence of drugs), the agreement will likely be invalidated by the Court if challenged.
• Too Soon Before Wedding: Couples frequently postpone the signing of their prenuptial agreement to the very last minute. In many cases, the invitations have already been sent out when the prenuptial agreement is signed. In the event of divorce, one party can successfully argue he/she was coerced into signing the agreement. This can be avoided if the agreement is signed at least one to three months before the wedding date. The spouse-to-be should be given enough time to deliberate on the provisions of the agreement before signing it
• No Full Disclosure: When executing a prenuptial agreement, if one party doesn’t fully disclose all of his/her assets, properties and debts, the Court may invalidate the agreement. Therefore, make sure you and your spouse-to-be fully discloses all relevant information in the prenuptial agreement.
• Child Support Provisions: A prenuptial agreement cannot have any provisions relating to the children of the marriage, such as custody and child support. These sorts of agreements are deemed to be counter to public policy and thus unenforceable. The Court will disregard all such provisions and pass judgment in the best interests of the children. The Court may also decide to invalidate the whole agreement if such provisions are present.
• Unconscionable: Although it is acceptable for a prenuptial agreement to be biased towards one party, it cannot be so one-sided that it renders the prenuptial agreement unconscionable. Unconscionable is often defined as shocking the conscience. If your prenuptial agreement is unconscionable, it will likely be deemed unenforceable by the Court. Also, if enforcing your prenuptial agreement results in one party becoming dependent on State welfare, the court may tweak the agreement to take that person out of welfare.
• Unenforceable Provisions: If your agreement has any unusual provisions in it, such as one person should do the dishes or he/she should maintain a certain hair color, those provisions (and usually those provisions only) may be deemed unenforceable. If such provisions are present, they may weaken the whole agreement.
• Oral Agreement: Courts disregard oral prenuptial agreements except in select circumstances. The prenuptial agreement should be in written form. Ideally, you should sign four copies: one copy for each partner and the other to be kept with each party’s independent attorney.
• Ambiguous Writing: The enforceability of any legal agreement depends on the exact wording of the agreement; a prenuptial agreement is no different. If your agreement is not clear or has ambiguous wording, it may get successfully challenged in court. You should seek counsel of a competent attorney to help you draft a sound agreement.
• Promises made, but not kept: Don’t make promises to your significant other that you are not willing to keep. If you make such promises, the Court may interpret that as fraud and throw out the prenuptial agreement.