Also called an antenuptial agreement, premarital agreement, a written contract between two people who are about to marry, setting out the terms of possession of assets, treatment of future earnings, control of the property of each, and potential division if the marriage is later dissolved. These agreements are fairly common if either or both parties have substantial assets, children from a prior marriage, potential inheritances, high incomes, or have been “taken” by a previous spouse.
Although many couples might not find signing documents such as prenuptial agreements to be very romantic, if either you/or your fiancé has been divorced, then you already know how valuable a premarital agreement can be.
Couples with significant assets and/or children should consider having an attorney draft a prenuptial agreement. Couples without Prenups will have their assets distributed for them by the state if the marriage ends and they disagree about who should get what. Without this important document, you are allowing your financial future to be determined by the state.
None of us marries someone expecting to divorce him or her later (not even Elizabeth Taylor). Yet each year, 1.2 million couples call it quits in the United States. And of those, only 5% ever go to trial, according to the American Bar Association. Most of us would prefer an amiable separation, or at least an out-of-court settlement. Divorces are painful enough without courtroom confrontations.
One way to potentially save yourself from a messy court fight is if you and your soon-to-be partner sign prenuptial agreements. While one judge complained that nuptial agreements can have a “chilling effect on the personal relationships of the parties,” prenuptial agreements — those signed before a marriage — can also ease the pain of divorce, preserve family ties, and even make a marriage run smoother. These agreements can also be signed long after the wedding takes place.
In the past, prenuptial agreements were often favored by individuals who were marrying for the second time, and had assets from a previous marriage that they wanted to preserve for their children from that marriage. Thus, the couples were typically older and had a significant amount of assets.
Increasingly, probably because many people are marrying later for the first time, prenuptial agreements are also being used by individuals marrying for the first time who have been in the workforce for some time and have accumulated assets that they do not want to lose in the event of a divorce. In addition, people who have friends who have been “burnt” by divorce may wish to consider prenuptial agreements, which limit not only the distribution of assets but also the amount and duration of support that one party can receive from the other.
Before you bring it up, consider the consequences. Do you want one? Or is it your family or friends who have encouraged you to do so? Be very clear in your mind what you want to accomplish and why. Then tell the truth. “I want my children to know that I haven’t abandoned them financially.” “I want to give you protection against a fight from my first family.” “I ran my business for 10 years without any interference or ownership by others. I need to keep that autonomy to stay motivated.” What if your spouse won’t sign? That’s the benefit of these agreements; you get things out in the open before it’s too late.
A nuptial agreement is a contract signed by both parties and notarized. In most states, it is acknowledged as if it were a deed. Nuptial agreements need not be filed with the court, and are not reviewed before signing. But they can be set aside for fraud, duress, failure to disclose, unfairness, and failure to be adequately represented. By far, the failure to disclose is the biggest issue. All states require that there be full disclosure and that each spouse be fully aware of what they are getting and giving up. If either side is not represented by counsel, or even poorly represented, these agreements can be set aside. Nuptial agreements dictate rights and responsibilities during a marriage. Nuptial agreements were popularized in the 19th century, mostly to protect heiresses from marrying men who were “out for their money.” Until the Married Women’s Property Act of 1848, a woman’s property, upon marriage, was transferred to her husband. The scoundrel who married a woman for her money knew what he was doing. He didn’t even have to wait until she died for an inheritance. When they married, her money became his, a nd any business that she managed became his, too. If she inherited money during the marriage, that, too, was his.
In the nuptial agreement, either party can waive rights given by law. Yet one spouse can voluntarily give to the other as much as either wishes. If there is an ongoing business or other important income-producer, the agreement can state who will run the business, handle the investments, and receive the income or proceeds from it. The agreement can state that funds from a certain source belong to both parties equally or in different proportions. The parties can even agree on how they will spend certain sums throughout the marriage.
With a nuptial agreement, a person can disinherit a spouse, settle property rights, or exempt a major asset like the family business from the marital estate. Without such a signed agreement, most states give a surviving spouse a minimum of one-third of the total assets.
A prenuptial agreement is a binding agreement best entered into before the marriage in which the parties, in as much detail as they wish, set forth what will happen to their income and assets in the event the marriage ends in death, divorce, or separation.
Doesn’t a prenuptial agreement mean the parties don’t trust each other?
Maybe, but a prenuptial agreement usually is grounded in realism rather than a lack of trust. Younger couples may simply feel that a prenuptial will save expenses later if the marriage does not work out.
Do courts uphold prenuptial agreements?
The validity of a prenuptial agreement depends on the state where you live. In general, the closer to the wedding date the prenuptial was signed, the greater the danger that it will not be upheld. If one side was represented by a lawyer and the other was not, or both sides were represented by the same lawyer, either party can argue he or she did not understand what was signed, and the prenuptial agreement may not be valid. If the parties failed to fully disclose their assets, the prenuptial agreement can be attacked on that basis. The greater the number of these factors in one case, the greater the chances a court may not uphold it.
Finally, a court may ignore provisions concerning custody and child support in favor of the standards of what is in the best interest of the child.
How does a judge decide whether to uphold the prenuptial agreement? A judge may conduct a trial on the issue or may read sworn statements concerning the agreement. Decisions are based on which side the judge believes, as well as a consideration of the law.
Prenups can help protect funds either spouse may have saved for a child’s college education or their retirement, before the marriage. Having this agreement drawn up before the wedding can save you time, emotional trauma, and, of course, money if the marriage does happen to fail.
Sit down with your partner and make a list of all assets. You will be best served by contacting an attorney who specializes in divorce and remarriage. Each partner should hire their attorney to write a premarital agreement. This helps avoid any claims/defenses of fraud if the marriage ends in divorce. If either partner has children from a previous marriage, clarify their property rights and how they’ll be supported, both during the marriage and in case of death or divorce. The attorneys co-write the agreement with their clients’ best interests in mind. Use any combination of prenuptial agreements, trusts, custodial accounts, and wills. The agreement should be signed in triplicate, with each partner getting an original copy, and a third being kept with an independent lawyer, CPA, or in a safe deposit box. Prenuptial agreements can offer much-needed peace of mind and security.
