A prenuptial agreement is an agreement between two people before they get married that addresses the ownership of their respective assets if they should ever divorce. For some couples, especially those entering into a second marriage, a prenuptial agreement is an extremely helpful way to manage financial and estate planning issues. The process of crafting a prenuptial agreement is an exercise in money management and financial planning that provides more than just economic benefits to the couple involved.
What Should Be in a Prenuptial Agreement?
Each prenuptial agreement should be specifically designed for the needs and values of the two parties and should address the following topics:
- A prenuptial agreement should address in detail the pre-marriage (pre-marital) assets each spouse wishes to keep in case of divorce. Similarly, the agreement should identify items or assets that can be blended and are not separate.
- A prenuptial agreement should address what will happen with the income earned by both parties. A prenuptial agreement should outline whether retirement benefits and other assets earned after the marriage are shared by the couple, saved for their respective children, or some combination of the two.
- If one spouse moves into the other spouse’s home, the prenuptial agreement might include provisions regarding what happens to the house and a spouse’s occupancy after divorce or death.
- The prenuptial agreement should address what happens after the death of either party. There is usually some allocation between the surviving spouse and the party’s own children, depending on the surviving spouse’s ability to take care of him/herself after the death.
Sometimes there are disappearing or “sunset” provisions so that the longer one is married the more blended the couple’s financial resources are allowed to be.
Some prenuptial agreements purposely leave out some issues in the agreement. This is to allow the couple to build an area of “marital venture” that is uncertain and almost entrepreneurial. (Need example here.) These areas tend to positively feed a marriage. And if there is a divorce, absent agreement, these issues are left to the agreement of the parties to resolve.
Who Benefits from a Prenuptial Agreement?
Not every couple needs a prenuptial agreement. But, every couple can benefit from learning the mutual problem-solving and financial planning skills that are part of the process of drafting a prenuptial agreement. A prenuptial agreement might be right for you if you want to:
- Protect the interests of children from a previous marriage
- Preserve assets that would otherwise become part of the marital estate
- Define the way in which assets accumulated before marriage such as a house or business will be kept separate if the marriage ends
- Set limits to the amount and duration of alimony (spousal support) in the event of legal separation or divorce
- Establish a way to handle future disputes over money and practical matters during the marriage
- Establish the terms of a domestic partnership agreement
When should a premarital agreement be drafted?
A prenuptial agreement should be drafted as far in advance of your wedding as possible. We recommend drafting your prenuptial agreement at least 6 months before you get married. This allows enough time to thoughtfully work out the terms of the agreement. Also, a prenuptial agreement signed six months before the wedding is seen by the court as a stronger contract than one signed right before the wedding ceremony.
If you are negotiating a prenuptial agreement a short time before your wedding, it is imperative that you work with experienced legal counsel who can make sure all pertinent issues are addressed and the prenuptial agreement is likely to stand up should you need to go to court.
Prenuptial Agreement Mediation
Prenuptial agreements can be very tricky to negotiate because they touch on sensitive issues about trust, long term security, and communication. “Off-the-shelf” prenuptial agreements do a great disservice to the parties and to the marriage itself and may not be correct of adequate in light of recent case law. A mediated prenuptial agreement is more likely to be fair, more likely to start the marriage on solid ground, and there is less chance of either party contesting the prenuptial agreement if there is a divorce.
At Ollennu & Associates, our trained mediators will guide you through the process of drafting a prenuptial agreement. We help clients establish peace of mind through thoughtful planning and communication. If you would like to speak with one of our attorneys about a prenuptial agreement, please contact our office to make arrangements for a complimentary consultation.