For couples about to marry, one issue to decide is whether to have a premarital agreement. With more and more separations, divorces and remarriages resulting in multiple family relationships, this question is more common and important than ever.
A premarital agreement is a contract made by a couple before marriage. It typically spells out the parties' rights after the marriage, including what happens in the event of divorce or death.
Issues Premarital Agreements Can Cover
Premarital agreements can cover many issues. Although laws vary from state to state, issues that can often be covered in a premarital agreement include:
• How property will be divided in a divorce. Without a premarital agreement, in a divorce property will be divided according to state law. Rules for dividing property vary between states. In "community property" states, the couple’s community property — the property either spouse obtained through his or her work during marriage — is divided evenly. In most other states, courts divide the property fairly after considering several factors, including the couple’s assets, the length of the marriage and each spouse’s contribution to it. The split could be even or uneven. By making a premarital agreement, couples can change how property will be divided. For example, they can agree that in a divorce, one party will receive only a certain amount of money or specified property.
• What one spouse receives when the other spouse dies. The premarital agreement usually controls over a spouse's inheritance rights under state law. As an example, a couple may have a premarital agreement that says when a spouse dies, the other spouse waives his or her right to an inheritance, even though under state law he or she would have received part of the deceased spouse's estate.
• That earnings of the parties will be separate property. Many working couples want to keep their earnings separate and maintain control over them. A premarital agreement can provide that money each person earns is that person's own separate property, and will be kept in his or her own bank account.
• Protecting children from an earlier marriage. Many people who enter into second marriages want to protect inheritances to their children from a prior marriage. A premarital agreement is a good way to accomplish this. Without a premarital agreement, your new spouse could be entitled to property that you wanted children from an earlier marriage to receive.
• Alimony. In many states, couples can specify in a premarital agreement whether alimony will be paid as well as the amount. Some states do not allow a spouse to give up his or her right to receive alimony, and courts will void any provision in a premarital agreement doing so.
• How living expenses will be paid. For example, the premarital agreement could specify that common expenses like housing, utilities and food will be split by the parties on an equal or other basis.
• Duties during the marriage. Premarital agreements can cover a variety of other issues relating to the marriage, including how tax returns will be filed, if there will be joint bank accounts, where the parties will live, the freedom to pursue career opportunities, how children will be raised, and other issues.
• Child custody and support issues. Premarital agreements can address child custody, support and visitation issues, but these provisions are not binding on a court, since the child’s best interests are the deciding factors.
Working out difficult issues like these in advance can help avoid the uncertainty of what a court may do as well as help avoid expensive and lengthy problems later. If a divorce does occur, the premarital agreement will likely make it go easier since some key issues will already have been decided.
Enforceability of Premarital Agreements
What sometimes happens when a couple with a premarital agreement divorces is that one spouse will claim the agreement is unfair and try to get it voided. There are grounds for invalidating a premarital agreement, and they vary from state to state. Some of the main reasons a premarital agreement may usually be voided are:
• One of the parties did not sign the agreement voluntarily. If a party was pressured into signing the agreement, a court may not enforce it.
• The agreement was verbal. Premarital agreements are generally required to be in writing and signed by both parties.
• Fraud was used to get a party to sign the agreement. For example, if the wealthier party hid or misstated assets or income so the other party would agree to take less money in a divorce, a court may not enforce the agreement.
• One party did not have enough time to review the agreement. To reduce the chance of a party giving the other a "sign this or the marriage is off" ultimatum just before the wedding is to take place, some states require that a person have a certain amount of time to review the agreement before signing it.
• The agreement is "unconscionable." Parties to a premarital agreement are generally allowed to give up inheritance and support rights the law grants to them. But if the agreement is so unfair that one party would likely suffer extreme financial hardship, a court may refuse to enforce the agreement.
• Both parties were not represented by a lawyer. It's highly advisable for both parties to have legal representation so they are fully aware of what is being signed. Some states require this in order for a premarital agreement to be valid.
Changing Premarital Agreements
Premarital agreements can be changed after the marriage. However, any changes must be agreed to in writing by both parties.
Premarital agreements are common due to the high number of divorces in our society. Whether a premarital agreement should be used depends on the circumstances of each case. If you are considering a premarital agreement, call our law firm. Laws for making premarital agreements are complex, and you (and your future spouse) should be fully aware of what's being signed. Taking the right steps can increase the chances a court will uphold the premarital agreement and thus provide its benefits to you.
Contact an attorney at Triscaro & Associates today. Please call us for all your legal needs. We offer a full range of legal services to individuals, families and businesses, including personal injury, estate planning, real estate, family law and business matters. We are dedicated to providing the highest quality legal services at a reasonable cost.