Are you preparing for marriage? Although many people frown upon prenuptial agreements, more and more couples today understand they are an important part of a responsible union. Prenuptial agreements present couples with an opportunity to discuss and put into written form their understanding of the bounds of their marriage in terms of assets and also debts.
When it comes to property division, how you divide your assets makes all the difference. The following are some basics to help ensure that you get your fair share.
“Community Property” vs. “Equitable Distribution’ states
Division of martial property conventions in the United States fall into two basic categories: (1) the “community property” states, and (2) the “equitable distribution” states.
Britney Spears sure has her critics, but with the dissolution of her marriage, she’s laughing all the way to the bank. With all of Britney’s millions, K-Fed has made off with a lot less than he could have. Her love may have faded, but her ironclad prenup has steadfastly weathered the test of time.
Though they have been stigmatized in popular culture as cynical arrangements and romance-killers, prenuptial agreements have become increasingly common in recent years. With over half of all marriages now ending in divorce, a prenuptial agreement may be seen not only as practical, but necessary. Without such agreements, the state may either grant each spouse one-half of the marital assets (if they live in a community property state) or divide the assets based on an “equitable distribution” (if they live in a non-community property state).
A prenuptial agreement is a private agreement between two parties who are intending to marry that sets forth the distribution of assets (and debts) that will occur in the event of the parties’ divorce or death. For the most part, the couple is given leeway to divide their property as they see fit. However, there are certain limitations that have been imposed by state law to ensure that these agreements don’t unfairly benefit one party or appear to have been entered into under duress.
Four rules must be followed in creating your prenuptial agreement:
(1) Both parties must be completely honest about their assets and debts. If one or both of you have hidden something or lied, a judge can discard the agreement and create a new distribution of assets, and may even penalize the dishonest party in the new distribution.
(2) The agreement must be signed in advance of the wedding to avoid the appearance of impropriety or coercion. To be safe, this should be at least a month prior to the wedding. In some jurisdictions, there must also be a delay from when the proposed agreement is received by the parties to when the agreement is signed.
(3) Each of you should be represented by separate and independent counsel. This helps to convince the court that neither party signed the document without proper information or under the influence of the other party. “Separate” means that you and your spouse have different attorneys. “Independent” means that your attorney is not beholden to your spouse, or being compensated to serve his or her interests instead of yours.
(4) Finally, the prenuptial agreement must be fair and reasonable. This means, in essence, that the agreement cannot leave one of the parties with the lion’s share of property and leave the other destitute.
There are several other things to keep in mind when creating your agreement. Don’t get caught up in trying to cover every situation or potential crisis. Focus on the essential elements that are important for you and your future spouse to resolve: for example, are you protecting children from a previous marriage? Ensuring that one party’s family business remains in his or her hands? Permitting one party to stay home with children without worrying about his or her professional future? The answers to these questions will determine the contents of your agreement.
Do not attempt to waive child support payments or to put strict limitations on such support. Courts do not look kindly on efforts to circumscribe the rights of children, and attempts to do this will likely not be enforced. Rather, the court may investigate what distributions and outcomes will be in the “best interests of the child.”
Good luck, and congratulations on your marriage.
Based on New Jersey Law
While not exactly the glamorous side of a marriage proposal, the idea of a prenuptial, or ante nuptial, agreement is something that most people about to be married should discuss. In case a marriage doesn’t work or one spouse dies before you have a chance to do a comprehensive estate plan, a prenuptial agreement can safeguard assets, protect one party from the other’s debts, and make any possible divorce proceedings go more smoothly without unnecessary rancor.
Some prenuptial agreements can cover day-to-day details such as who will pay the mortgage and other bills or how child care is to be handled. Since more couples are signing prenuptial agreements, you need to discuss this openly with your intended spouse. If you both feel a prenuptial agreement fits your situation, you each need to see a lawyer to discuss it further.
Even though more prenuptial agreements are being signed then ever before, it is something to consider only if one of the following applies to you:
Once you have decided if you need a prenuptial agreement and what should be in it, the question becomes whether or not it will be valid and enforceable. There are certain essentials to creating a valid prenuptial agreement:
The sooner before the wedding date that you prepare the prenuptial agreement the better it will be for both of you and your relationship. Either party broaching this subject is likely to be suspected by the other of lack of trust. However, since more then half of all marriages do end in divorce, having a prenuptial agreement should be considered a very practical thing to do and not a doomsday expression of your marriage’s chances. In fact, open communication with your new partner could be the best way to start a new relationship.