There is a popular misconception that prenuptial agreements are only issues for the fabulously wealthy. This could not be farther from the truth. In this post, I'll explain the value of these agreements, how they work, and why one can make an incredible difference in divorce proceedings, should they ever occur.
Why Prenuptial Agreements? I'll begin this post with a story from my own life which is relevant. When my wife and I were getting ready to get married, the priest who was going to perform the ceremony insisted that we sit down with him for a long talk. I had anticipated a theological discussion, but what I got was a practical one. He asked us about money, careers, and kids. He outlined several different problems that can crop up in marriages and asked how we would handle them.
The discussion was an absolutely wonderful one because it forced us to think long and hard about topics that we otherwise would not have considered until the problems arose (which is not a great time to think about it, between stress and emotion).
When people come to me for a prenuptial agreement, I often think about that discussion with our family priest. Prenuptial agreements (or post-nuptial agreements - they can happen after the marriage) are highly detailed and force parties to have all of those hard discussions and decide on boundaries and priorities. They have to think about what they own already, what they are going to own in the future, and how they are going to treat it. Roles have to get more clearly defined. In most instances, the marriage is stronger for this process. Couples do things like set up joint bank accounts for community expenses, or set up new retirement accounts that will be funded after the marriage starts.
In a few instances, these questions have actually helped people figure out that it was not the right time to get married. (This sounds sad, but it isn't - far easier to avoid a bad marriage beforehand than to get out of one afterwards.) I cannot tell you how many divorces occur because the hard discussions are not had and the boundaries are not set until way after the fact, which leads to conflict.
These agreements vastly reduce the amount of fighting that goes on in divorces, because they are binding and have very clear instructions on how things work. Legal costs are drastically reduced. The parties will have a high level of certainty about what would happen in the future, should they choose divorce. This type of clarity can be very beneficial.
What are Prenuptial Agreements? In the most simple sense, these are contracts between parties to provide structure for how the parties will handle a divorce. Typically speaking, they focus on property since the parties cannot make a contract that "short circuits" the Court's duty to make determinations about custody or determine child support. (Custody and support can be covered in a contract, but the provisions are not binding - they can be evidence to support a particular custody arrangement, but the Court has the freedom to disregards those portions of the agreement if they are not in the child's best interest.)
These agreements can be total agreements, where they account for all property (community and separate). There are also partial agreements, which cover only some property and let the rest get divided under divorce law. These agreements can also cover topics like maintenance. In many instances, there are agreements that only cover certain assets, like a business one of the parties owned before a marriage to make sure that the marrying spouse never gets a controlling interest in the business.
How are Prenuptial Agreements Made? A common misconception is that a single attorney can draw up an agreement and assist both marrying partners. This is incorrect because the attorney is not allowed to represent both parties. Instead, one party will hire the lawyer and draft the agreement. Once the agreement is ready, it will be shared with the other party along with exhaustive financial disclosures.
The financial disclosures surprise people, but they are absolutely necessary. These agreements must be fair (both in substance and procurement) to be enforceable. This means that you have to totally inform the other party as to the extent of all assets so they know exactly what they are potentially getting (or losing) by signing the agreement.
The other party will then review the documentation and the contract with their own lawyer. (It is common for the first party to actually offer to pay for the second party to get an attorney to look it over. This is a worthwhile and necessary expense. It again goes to fairness. For the agreement to be fair and enforceable, there needs to be written documentation that the other party reviewed the agreement with an attorney, understood it, and signed it having full understanding of the agreement.)
To the uninitiated, this may seem like "overkill," but it is absolutely necessary. These agreements will be rigorously examined and tested in the divorce process. To remain enforceable, they must be immaculate in how they are procured. They should also be fair to both parties - an agreement with an utterly lopsided or disadvantaged property distribution will often not be enforced by the Court. Knowing what "passes muster" absolutely requires a skilled attorney who knows the case law surrounding this topic.
When do you get a Prenuptial Agreement? There are two answers to this question. The first is well in advance of the marriage. Agreements procured within weeks of a marriage are generally considered as being obtained under duress. I advise parties it needs to get done, bare minimum, three months in advance of the marriage. There needs to be enough time for drafting, review, and for everyone to confer with a lawyer and think about the agreement before signing.
If you are "danger close" to the wedding, these agreements will still be available, but you will need to execute them after the marriage. These are called "post-nuptial agreements" and they are equally enforceable. They also follow all the same rules above - full disclosure, knowing consent, and the like. With that said, there is no legal obligation for another party to sign one of these after a marriage, so you should be aware of that and act accordingly. There have been some instances where parties have agreed to delay nuptials until everything got finalized.
Conclusion: These are valuable and important legal tools. If you or someone you know is looking at getting married, it is absolutely worth your time and money to set down with a lawyer and talk about the benefits of one of these agreements.
As always, I hope this helps!
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