Marriage Planning - Prenuptial and Postnuptial Agreements

A prenuptial agreement can help you and your soon-to-be-spouse establish the kind of honesty and long range planning that will make the financial side of your marriage successful.

Before you enter the contract of marriage, you should have a plan about what to do if you decide to divorce. Establishing a prenuptial agreement before marriage is smart financial planning. This legally-binding document does not look forward to a couple’s imminent divorce. Instead, a prenup is a private contract that outlines the decisions regarding each spouse’s property if they dissolve their marriage in the future. If you do divorce and have a prenuptial agreement, you and your spouse won’t have to suffer through the emotional and financial costs of dividing every asset.

Who Needs a Prenuptial Agreement?

While there are benefits for any couple, you should strongly consider a prenuptial agreement if:

• You own, or are a partner in a business, medical practice, law firm, or professional corporation.
• You are in a career or business that is, or is likely to be, successful.
• You and your spouse are entering the marriage at different stages in life (e.g., one spouse has children the other does not, one spouse is in the workforce the other is retired).
• You have significant assets such as real estate, trust funds, or investments.
• You have much more money, or much less debt, than your fiancé.
• You will be supporting your spouse while he or she attends school.

What a Prenup Can Do

Set rules about marital assets: A prenuptial agreement protects spouses’ rights and obligations to their property. In other words, the document decides ahead of time which items are marital assets and which would be separate in the event of divorce.

For example, if one spouse owned a home before marriage, the document might state that he or she would have full ownership. That also includes full obligations to the financial costs associated with the house.

Protect one another from the other spouse’s debts: The document can limit each spouse’s debt liability. That way, creditors cannot go after all the marital property if one spouse accrues debt.

Protect children from previous relationships: Spouses with kids from previous relationships can entitle them to money and property.

Protect family property: Couples can note heirlooms, inheritances, business, and other family-owned property in the prenup. Doing so keeps their ownership within their birth families.

Simply put, prenups protect spouses’ property. A couple can typically include anything financial-related in the agreement.

Drafting a Prenup

We believe that it is important to negotiate and execute a fair and legally binding prenuptial agreement with the person you love before other things get in the way.  In order to do so, it is important that:

1. The document is equitable.

A court is unlikely to uphold a prenup that is blatantly one-sided and that does not account for the interests of both parties. In other words, the agreement is less likely to be challenged in the first place if it is fair. 

2. Both soon-to-be spouses have legal representation.

The court will presume that both parties understand the terms of the agreement before signing it. So, each party should have independent legal counsel review the proposal. If both partners are represented by lawyers, then both of their interests will be protected. It is often acceptable for one spouse to pay for the other’s legal representation. If this is the case, it may be wise to include some language within the document stating that the recipient chose his or her counsel and was satisfied with the provided representation.

3. All the details that are important to you are included in the agreement.

While things like child custody cannot be included in a prenup, other important things can.  The most common details are those that relate to property, money, inheritance and other assets. It can address important considerations such as property division, separate property, and spousal support.

It cannot be stressed enough: do not attempt to hide assets when putting together a premarital agreement. Although complete disclosure of every single asset is generally not necessary, both parties should be provided with enough information to have an understanding of the impact of the agreement.

Postnuptial Agreements

During a marriage, couples may enter into a postnuptial agreement covering the same terms described above. For example, a couple may decide to create a postnuptial agreement when one of them has received or is expecting to receive an inheritance that they want to keep separate in the event of a divorce.

If you're needing to discuss options in drafting a pre-nuptial agreement, please give our office a call at 502-309-2512 to see how Heartfelt Counsel can assist you in legal matter.