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Pre Nuptials Library

It's an enchanted evening at your favorite restaurant, and your significant other has just popped "The Big Question". You swoon and say yes and, after your vital signs return to normal, Mr. Perfect pops another question: "Honey, would you mind signing a prenuptial agreement?"

Nothing kills romance faster than the word “prenuptial”. But with about one in three of all first marriages ending in divorce, and one-half of second or third ones hitting the skids, a prenuptial is smart financial planning, legal and financial experts say.

Think of it as a business arrangement or as an insurance policy to help remove some of the emotion that's naturally involved. Marriage is not just an emotional and physical union - it's also a financial union. A prenup and the discussions that go with it can help ensure the financial well-being of the marriage.

General Purpose
A "premarital agreement" or "prenuptial agreement" is "an agreement between prospective spouses made in contemplation of marriage and is to be effective upon marriage." Uniform Prenuptial Agreement Act, prefatory notes.

In simpler terms, a prenuptial is a contract between two people about to wed that spells out how assets will be distributed in the event of divorce or death. Such agreements have existed for thousands of years in some form or another, particularly in European and Far Eastern cultures, where royal families have always made provisions for protecting their wealth.

Not just for the rich
You don't have to be a Warren Buffett or a Donald Trump to need a premarital agreement. A person who has managed to have $40,000+ in equity or savings may be more protective of their little nest egg than someone who has millions.

You should consider having a prenup if you fall into any of the following categories:

You have assets such as a home, stock or retirement funds;
Own all or part of a business;
You may be receiving an inheritance;
You have children and/or grandchildren from a previous marriage;
One of you is much wealthier than the other;
One of you will be supporting the other through college;
You have loved ones who need to be taken care of, such as elderly parents;
You have or are pursuing a degree or license in a potentially lucrative profession such as medicine; and,
You could see a big increase in income because your business is taking off, or that garage band you play in has just gotten a contract with a big record company.

What the signs of a valid prenup?
Perhaps the most important ingredient of a solid prenuptial agreement is honesty. Both parties must FULLY disclose their assets. If it turns out either person has hidden something, a judge can toss out the contract.

An agreement also must be signed well in advance of the wedding. You can't present your beloved with a prenup a week before the big day and say, "Honey, by the way, I need your signature on this."

The document should be signed as early before the nuptials as possible to avoid the appearance of coercion, another key reason why some agreements are rendered null and void.

It is recommended a prenup be signed at least one month before the wedding and definately before the invitations have been sent out...you don't want to have to send back presents! Then, if you're uncomfortable with the terms, you both have time to back out.

Another sign that a prenup is valid is it "fair" and will not leave one of the parties destitute. No matter what state you reside at the time of the marriage the state will look for equity to make sure one spouse is not being taken advantage.

Prenups can include responsibilities that don't deal with money, but you should avoid making demands that might seem frivolous, such as requiring that your spouse not gain weight, or that he or she quit smoking and take out the garbage three times a week. A judge could look askance upon terms that are less serious than, say, stipulating what religion your children will observe if you and your betrothed are of different faiths.It's dangerous to do this, and you're running the risk of having the whole thing set aside.

Prenuptial agreements are gaining in popularity. There are many reasons why. One reason is that individuals today are focusing on their careers at an early age and are getting married later on in their lives, after they have accumulated property and financial worth.

Most couples enter into these agreements to fix their rights to property owned by each both before and during the marriage.

Our Prenuptial Agreement
Generally, the allowed subjects of a prenuptial agreement are as follows:

The rights and obligations of each of the parties in property of either or both, whether acquired before or after the marriage;
The right to buy, sell, use, transfer, exchange, abandon, lease, consume, control, manage, or create a mortgage or encumbrance upon property of the parties;
The disposition of property upon separation, marital dissolution, or death;
The modification or elimination of alimony (also known as "spousal support"), but please note that prenuptial agreements may not affect the right of either party to receive child support under state law;
The rights of either party under a will or trust created by the other party;
The ownership rights in and disposition of the death benefit from a life insurance policy; and
The choice of which state's law shall govern construction of the agreement.

Are Prenuptials Valid?
Courts usually uphold prenuptial agreements unless one person shows:

That the agreement is likely to promote divorce,
That the agreement was written and signed with the intention of divorcing,
That one party was forced into signing it, or
That the agreement was created unfairly.

Are these agreements legally enforceable?
In the vast majority of states, the answer is "Yes"; however, certain rules apply as to what can and cannot be in a prenuptial agreement. A law called the Uniform PreMarital Agreement Act provides guidelines for people entering prenuptial agreements. In Arizona, see ARS 25-201 et seq.

Also, under the Uniform Prenuptial Agreement Act which has been passed by 27 states, a court may determine a prenuptial agreement to be unenforceable in two instances:

The party seeking to avoid the agreement did not voluntarily execute it (i.e., one party signed under duress); or
The agreement was "unconscionable" when it was executed and the party seeking to avoid the agreement.

The legal term "unconscionable", although defying precise definition, is a standard whereby the court determines if the agreement was so one-sided, or unfair that it should not be enforced in the interest of justice. "In order to determine whether the agreement is unconscionable, the court may look to the economic circumstances of the parties resulting from the agreement, and any other relevant evidence such as the conditions under which the agreement was made, including knowledge of the other party." Comments to Section 6, Uniform Premarital Agreement Act.

Generally, the situations that weaken the case for enforcement of a prenuptial agreement are:

if it is signed close in time to the wedding (i.e., within a few days which may indicate that the decision was rushed),
one side was represented by an attorney while the other side was not,
both parties were represented by the same attorney,
failure of one party to fully and accurately disclose all assets and debts, and
the agreement is patently unfair to one party or another.

In states other than those that have enacted the uniform act, one is forced to search through the case law, which can change daily, to determine what the law is and, for this reason, no solid statement can be made regarding the enforceability of prenuptial agreements.

For more information on your state law>>>

Special Features of our Prenuptial Form:

Allows a prospective married couple to agree which assets they currently possess, including retirement plan benefits and accounts, shall remain their separate property;
Allows a prospective married couple to agree which assets and income they obtain subsequent to marriage shall remain their separate property;
Allows a prospective married couple to agree to limit the amount of alimony either party could obtain in case of divorce; and
our questionnaire creates a summary financial disclosure statement for both the prospect husband and wife which is a vital element of any prenuptial agreement.

The greatest problem in most divorces is deciding how to divide your property and money. A few minutes planning upfront could save exhaustive hours, headaches, and tremendous financial hardships, should your marriage end.

Community Property and Equitable Distribution
In order to understand what a prenuptial agreement can do, it is important to understand the concepts of community property and separate property. Community property is the rule of law followed in the following states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. All other states follow equitable distribution laws.

One of the primary issues in a divorce is how to divide assets. In a community property state, the husband and wife are deemed to equally own all income and assets earned or acquired during the marriage. This means that both the husband and wife are deemed to equally own all money earned by either one of them during the marriage, even if only one spouse works. In addition, all property acquired during the marriage with "community" money is deemed to be owned equally by both the wife and husband, regardless of who purchased it.
In a community property state, all debts contracted from the beginning of the marriage until the date of separation are community debts, and thus, each spouse is each equally liable for these debts. In most cases, this includes any unpaid balances on credit cards, home mortgages and automobile loan balances.

In states that do not follow community property laws, property acquired during the marriage belong to the spouse who earned it, but in the event of divorce, the property will be divided between the spouses in a fair and equitable manner. This is known as "equitable distribution." There is no set rule in determining who receives what or how much, but a variety of factors are considered. For example, the court may look to the relative earnings contribution of the spouses, the value of the one spouse staying at home or raising the children, and the earning potential of each. Often, each spouse will receive between one-third to two-thirds of the marital property.

Regardless of whether your state follows community property or equitable distribution laws, a prenuptial agreement lets you decide how marital property will be divided in the event of a divorce. For example, a prenuptial agreement can state that income earned during the marriage will belong to the spouse who earned it. In this sense, a prenuptial agreement can "over-ride" community property or equitable distribution.

Separate Property
It is important to note that the rules of community property and equitable distribution only apply to income and assets earned or acquired during the marriage. Both community property and equitable distribution states have the concept of separate property, which is everything that a husband and wife own separately. In most cases, separate property is:

Anything owned prior to marriage,
Anything inherited or received as a gift during the marriage, and
Anything either spouse earned after the date of separation.

In the event of a divorce, separate property will not be divided. Similar to separate property, separate debts belong to one spouse. All debts incurred before marriage are separate debts. Thus, for example, educational loans or job training loans incurred before marriage are separate debts.

One of the prime benefits of a prenuptial agreement is that separate property can be prevented from being accidentally re-classified as joint property, either due to co-mingling or because payments were made out of joint funds. Prenuptial agreements can be keep debts separate. For instance, if one spouse owes a large student loan, you can both agree to have that student loan as a separate debt, and thus, only one spouse would be liable for that debt upon a dissolution of marriage.

Child Support and Spousal Support
No state allows couples to limit amounts for child support payments in a prenuptial agreement. Child support payments are provided by guidelines within each state.

On the other hand, the issue of whether spousal support may be waived varies from state to state. States which follow the Uniform Premarital Agreement Act permit a waiver of spousal support, but the laws on this topic are constantly changing. For example, until the California Supreme Court recently ruled that these types of waivers are enforceable, it was widely assumed that these waivers were not effective in California.

In general, a blanket waiver is acceptable in many states, but specific spousal support agreements (for instance, that the wife will receive $2,000 per month in the event of divorce) are more problematic and can be difficult to uphold.

PRENUPTIAL FAQs

Will an existing Living Together Agreement be enforceable after we marry?
Probably not. The reason is because courts hold that most Living Together Agreements are not made in contemplation of marriage. Unless the Living Together Agreement was made shortly before your marriage, it will probably be invalid after you marry. You should create a Prenuptial Agreement to replace any other agreements made before you marry.

Can child support be defined in a prenuptial?
Child support payments cannot be determined in a Prenuptial Agreement. The court will follow state guidelines to determine the amount.

How do I bring this up to my future spouse?
Prenuptial Agreements are often misunderstood. Some people argue that Prenuptial Agreements are an attack on trust. One spouse may believe that the other does not love him or her enough to share, while the other believes that if the love is strong enough, it should not be an obstacle. Whatever the case may be, you and your future spouse should try to approach a Prenuptial Agreement apart from the emotional aspects.

Prenuptial Agreements are a reality decision, and should be separated from the emotional aspects.

A few tips follow:

Approach the subject in a calm and caring fashion.
Explain that you are interested in a Prenuptial Agreement well in advanced of the wedding date.
This will give both of you time to consider it with no time constraints.
Mention that you believe the marriage will last forever, but anything can happen, and you want to be prepared.
Honestly communicate your needs, desires, and feelings.

Can we modify the Prenuptial Agreement after we are married?
Yes. The Equal Access Prenuptial Agreement allows you to alter or modify any terms of the agreement in the future if you so decide. The modification must be in writing and signed by both parties. The other terms of the agreement will remain intact, unless you revoke the entire agreement in writing.

If we can assist you in preparing a Prenupital, please contact us.

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