Prenuptial Agreements Explained
A prenuptial agreement (also known as a premarital agreement, antenuptial agreement, or simply a prenup) is a legally binding contract entered into by two people prior to their marriage, laying out the terms of their financial and property rights in the event of a divorce. This contract allows individuals to seize control of their financial affairs and avoid any misconceptions about what is and isn’t subject to division upon separation, through the creation of a fair and detailed framework for handling assets and debts. The contract provides clarity on matters of individual wealth, property ownership, spousal support, inheritance, debt liability, and child support, among others.
Protecting One’s Wealth
Prenuptial agreements are particularly useful for those with a significant amount of wealth accrued prior to the marriage, particularly when such individuals have children from a prior relationship who have already experienced the negative financial effects of divorce. Similarly, prenuptial agreements can be important for young couples to clarify what is to happen in the event one partner becomes wealthy over the course of the marriage. In such a case, a prenuptial agreement can protect the wealth of one spouse in the event of divorce while still providing fair, yet specified, means of support for the other.
While prenuptial agreements can be useful in a variety of situations, they are not always necessary for every couple. In some cases, such as when wealth disparity between spouses is small, the agreement may be of little utility. Prenuptial agreements are also inadmissible if obtained under undue pressure, in which case they can be declared null and void .
History and Evolution
The concept of a prenuptial agreement can be traced back to 200 A.D., when Roman law dictated that all couples must sign a marriage contract before marriage and all property acquired during the marriage would therefore be separate. It is this history of prenuptial agreements that provides today’s society’s insistence on fairness in relationships, particularly with respect to terms of legal dissolution.
In the United States, prenuptial agreements were long dismissed under the tenant of "coverture," whereby a woman’s fortune and identity were absorbed by her husband’s upon marriage. The concept of "separate estate" allowed for women to retain ownership of their property, but the legal system was not well-equipped to handle divorce litigation in those days. The first case that set precedent for prenuptial agreements in the U.S. involved a woman who intercepted a ships in harbor to locate her husband for divorce. In Brown v. Nye, the court agreed that the husband had been cruel to his wife and agreed to a lump sum settlement of $30,000. This case then opened the door for the legal system to begin recognizing legal prenuptial agreements.
Today’s considerations for prenuptial agreements differ in some respects from the past. In the 20th Century, for example, much of the structure of prenuptial agreements was decided by state law, making the terms of these agreements variable from state-to-state. However, in the late 1970s and early 1980s, a movement toward standardization among the states of legal premarital contract provisions began, leading to the widespread acceptance of the Uniform Premarital Agreement Act (UPAA).
Advantages of Engaging a Prenuptial Agreement Attorney
One of the primary benefits of consulting with a lawyer to draft a prenuptial agreement is the ability to receive legal guidance on what should and should not be included. While you may think you know what to do, procedures and requirements can vary state by state. Having a lawyer on your side makes sure that all bases are covered. Additionally, if you and your partner are not on the same page when it comes to the contents of your prenuptial agreement, a lawyer can ensure that your assets are divided fairly. Not all states are common property states and neither you nor your spouse might even be aware of exactly what the marriage laws in your area entail. Finally, pursuing a prenuptial agreement with the assistance of a lawyer can be a benefit in that the lawyer will be looking out for both of your interests, rather than just one or the other. Even if your fiancé knows that they need a lawyer as well, some of the information provided in your meeting might shed light on things that your partner had not considered. A fair mediation, rather than an adversarial process, ensures that both parties interests are protected, educating them both on common issues that occur in marriages.
Key Factors to Consider When Choosing a Prenuptial Agreement Attorney
Before you choose a prenuptial agreement lawyer to help you like and trust, there are several important things you must look for to find the right one for you. They are:
1. Experience
Many lawyers are quick to take on the task of drafting up a prenuptial agreement for clients. While you may think that they are experts in drafting prenuptial agreements, the truth is they are not. These lawyers cannot easily sort out which type of prenuptial agreement is right for their client. It is very easy for them to confuse a prenuptial with a cohabitation agreement and vice versa. It is very important that you inquire as to how many prenuptial agreements the attorney has actually drafted and whether this experience has given them familiarity with his type of agreement for clients.
2. Family Law experience
Some clients have hired corporate lawyers to draft up their prenuptial agreements. As a couple sits down with the lawyer and appraises all their assets, the lawyer is noting everything down. At that point, the lawyer is leaving the couple alone to draft the agreement, leaving much time for negotiation and getting together again at a later point to finalize the agreement. This does not worry the corporate lawyer because they assume the couple already has full knowledge of their abilities to freely contract. A family lawyer, however, fully understands that both parties need full and complete disclosure before consenting to such a contract.
3. Client reviews
Most law offices depend very much on the reviews received from former clients after handling their case. You should definitely find out how many clients were happy with the service they received and if they would recommend the services of the attorney. If the office sends a thank you card or email message to the clients following the completion of the prenuptial agreement, this is a good sign of their appreciation. All the former clients must be happy with the service and their lawyer’s work.
4. Negotiation
A prenuptial agreement seems very straightforward. The couple decides on what each will keep in a divorce and the lawyer drafts the contract. However, life is never so simple. An experienced prenuptial agreement lawyer knows this and will tell you that before any prenup can be created, both parties to the marriage must first disclose their assets and debts. This can often be a cause of concern for both partners and often some lawyers will spend considerable time during the negotiation of terms and provisions in the agreement, calming the other partner’s concern.
The Drafting Process of a Prenuptial Agreement
The Process of Drafting a Prenuptial Agreement If you decide to hire a lawyer to draft a prenuptial agreement, he or she will be able to guide you through the process from start to finish, no matter how complicated your situation is or how much property or assets you both have. Here are the basic steps for getting help from a lawyer with drafting and finalizing a prenuptial agreement. Initial Consultation. The assets, debts, and resources of you and your fiancée or fiancé will be analyzed. The agreement will then be based on that analysis. If possible, you should each separately meet with and consult your own representation to ensure that you are independently and fully informed of the situations in the agreement. Drafting the Agreement. The agreement will be drafted and then a review process will begin. Each of you will have a chance to review it before it is finalized. Sometimes terms can be changed through this review process. Negotiation. You and your spouse-to-be will negotiate the terms of the agreement. This could take place through your lawyers or during a meeting between you and your partner. When you negotiate, other negotiators will be present, representing you and your spouse so that the terms can be bargained over. There is often back-and-forth dialogue involved. This could be conducted over e-mail or the phone if you are working with a lawyer, or it could be handled between the two of you without your lawyers present. Finalization. You and your spouse will sign the prenuptial agreement. Once this happens, it is as legally binding as if you had signed a contract regarding the situation outlined above. Amendments and Revocation. The law regarding prenups actually gives you and your spouse some time to change terms that you initially agreed upon. A premarital agreement (or prenuptial agreement) is not enforceable if the agreement was the product of coercion. The agreement could also be revoked if you determine that certain terms are no longer equitable or if there are changes in the validity of specific assets contained in the prenup. If changes occur after the document has been created, you may need a lawyer’s assistance in drafting another agreement or an amendment to the existing one. Otherwise, you can draft the amendment privately.
Myths Surrounding Prenuptial Agreements
One of the key tasks of a good lawyer is to demystify some of the myths and mysteries that surround every legal issue. I am a firm believer that in confronting those issues head on, one can give clients the tools they need to make informed, long lasting decisions.
That is why it is important to dispel the following common misconceptions about prenuptial agreements:
1) "Prenuptial Agreements Are For The Rich"
Not so. Anyone who has assets of any value whatsoever should consider a prenuptial agreement when entering into a marriage. Even some of the poorest of Americans have valuable assets, such as a home or a business. With the average cost (and by this I mean the median cost) of divorce in America at around $60,000.00, it is always better to be prepared.
2) "Prenuptial Agreements Are Evidence Of A Lack Of Trust"
This is an idea promulgated by the romantic. The truth is that a prenuptial agreement is about one thing and one thing only: fairness. We don’t do business deals without contracts. Yet, many people enter into marriage without any sense of what will happen if the marriage does not work out. A lot of lawyers would tell you that this is the new American way: no pre-nups, no child support awards, limited alimony, and a "no fault" divorce process. In fact, I have often said to clients that "falling in love" is itself a risky business proposition. My job is to protect you from divorce, but if it happens anyway, we will negotiate an agreement that is fair to all parties, and make no mistake: no matter how fair the agreement is, someone will always end up unhappy . It is usually the financially weaker spouse. So why not give them the pre-nuptial agreement they need to at least provide for their basic needs?
3) "You Have To Have A Lot To Lose"
Think of a prenuptial agreement as insurance. You’re not getting married because your house is about to burn down, you’re just making sure you have decent coverage if it does. In other words, you do not have to have anything of great value to consider entering into a pre-nuptial agreement. In fact, I tell clients to consider the divide between what you bring to the marriage and what you bring to the relationship. If you own your home prior to marriage, that home is yours 100%–until you invite your spouse into the home. Now title will become an issue because you may have to refinance the home or add your spouse’s name to the deed. Even though you paid for the home fully prior to marriage, now you have a headache regarding joint ownership of the home. A prenuptial can help minimize the issues arising from the "what’s mine, what’s yours" concept that has plagued relationships from the start of time.
4) "Prenuptials Are For People Who Are Unhappily Married"
Once again, the issue here is lack of preparation. Having a prenuptial agreement does not mean that you plan to get divorced. You need to go into a marriage with the idea that it is going to be permanent. But the truth is that approximately 50% of first marriages end in divorce. Being prepared is better than being surprised.
Legal Requirements and Considerations
For a prenuptial agreement to be enforceable in most states, including under federal law guidelines, your lawyer will be required to work with you to establish that there has been full and fair disclosure of assets and liabilities, that the terms of the agreement are fair, and that you have a full and fair opportunity to obtain independent legal representation before the Prenuptial Agreement is signed. Both sides must volunteer to the agreement without any duress or coercion.
Disclosure norms apply to the entire financial picture, including things such as: A mutual exchange of information can aid parties in understanding, and can also ensure that both parties understand the economic risks inherent in entering into a prenuptial agreement. There should be no misrepresentations as to each party’s financial condition, and no concealment of income, other than for the sake of creating a prenuptial agreement.
Attorneys generally will recommend that a prenuptial agreement be executed at least 30 days prior to the wedding. Although courts retain the right to enforce an agreement entered into prior to the wedding, in certain limited circumstances (usually based upon a failure of one party to disclose his or her financial condition, or duress), agreements which have been entered into shortly before the wedding may be set aside.
How Prenuptial Agreements Impact Divorce Cases
When marital assets are divided even if there is not a prenuptial agreement, the most common method is equitable distribution. This means that the marital assets will be divided in percentage point increments based on value of both parties. For example, if there is a marital asset worth $100,000.00, then the marital assets of the parties will typically be divided so that one spouse receives 50% or $50,000.00 while the other spouse receives 50%. A prenuptial agreement may influence the equitable distribution as it relates to that particular asset. Examples can include the following:
- Example 1: Suppose that all of the marital assets were built through one of the spouse’s "blood, sweat and tears." The prenuptial agreement may specify that because this was unfair, that spouse gets to keep more of the overall property.
- Example 2: Suppose that the parties were previously married and had assets from a previous marriage. The prenuptial agreement can specify that these assets are not subject to division upon divorce but are kept by the individual who originally owned the assets from the first marriage.
- Example 3: Suppose that you and your fiancé created the prenuptial agreement to protect your children from a previous marriage. Many times, the assets of one or both of the parties are for the benefit of the children from prior marriages. In this case, the prenuptial agreement can specify that the assets are to be kept separate from the marital assets and never subject to division upon divorce.
One thing that is certain is that a judge has options when deciding how to divide assets but with a legally entered into prenuptial agreement, that judge cannot go outside the bounds of the agreement and create a completely different solution. Similarly, the prenuptial agreement can limit alimony to one year or eliminate alimony altogether. Without the agreement, the judge has broad discretion to consider all factors and may award alimony for a period of time greater than one year. Additionally, the judge can extend alimony or reevaluate during the pendency of an alimony award whether it should continue at the end of the award period of time. These circumstances arise because a party may continue to incur unexpected expenses over the duration of an alimony award.
With a prenuptial that limits the duration of alimony or eliminates that right altogether, a judge cannot stretch an award, no matter how harsh that may seem. At the same time, a judge cannot be bound by an agreement that limits the award to one year but the facts dictate an award for longer. It is the job of your attorney to advise you during the negotiations of the agreement so that you are comfortable with the terms. If you are not, you can walk away from the agreement. Unfortunately, once you sign the agreement, those terms are final.
Finally, a prenuptial agreement can address the payment of legal fees and expenses of the parties. Judges have broad discretion with respect to the award of legal fees and expenses. They can award fees for the needier party based on the circumstances of the case and the disparity between the income and standard of living of the parties. A judge can also consider the bad behavior of a party and the extent to which there was willingness to settle a matter. As well, the judge can consider whether the party enforcing the agreement has sufficient means to pay those fees and expenses. However, a prenuptial agreement can limit the judge’s discretion in this regard. If you are awarded legal fees and expenses in a prenuptial agreement and the fees are due and owing, then you will be entitled to an award of those fees without consideration to the other factors. This may seem like an overreaching provision but if you negotiated and purchased the agreement with that provision, it remains valid.
Frequently Asked Questions on Prenuptial Agreement Attorneys
Q: Why do I need to hire a lawyer for a prenup?
A: It is always advisable to have a lawyer, even if your spouse and you intend to do the process by agreement. Parties should have separate counsel, as both parties must agree on all points…and having counsel give full independent advice to both parties helps in the long run to avoid later problems.
Q: How much does a good prenup cost?
A: It varies from lawyer to lawyer. Every level of skill and payment is out there. Satisfaction of clients is what matters most, to me, and figure out along the road to get the job done, within whatever budget you may have, is also part of the satisfaction.
Q: How long does the prenup process take?
A: Plenty of time, and no time at all. A prenup can be any number of pages or one page, and that could mean hours or just a few minutes, depending upon the level of disclosure and agreement reached . But don’t expect to get a complete level of satisfaction in a day or two. Building trust takes time. But, if there are issues or assets to be protected, spending time and money now can save years of heartaches in the future.
Q: Will a prenup affect my relationship with my future spouse?
A: Being open and forthright in showing your spouse how much you care, or what your priorities are, will help you, the other and the relationship, to grow stronger. It is tough to face the potential of divorce, and it is tough to face your own version of it, but there is a time and place for it, and it will help everyone to know their own limitations and to protect them. It is not a reflection of how any of us feel, and I believe that it strengthens all marriages forever. But that is my view. The other day I heard a lawyer in Connecticut state that his prenups are jokes….that is true insanity to me.
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