Prenups can be a great tool for couple to use if they are thinking of getting married. A prenuptial agreement can help you establish the financial rights of you and your spouse in unfortunate event of a divorce including protecting a family business, or securing your personal assets. However, prenups have to be done right in order to be valid in your state.
Reasons Why A Prenuptial Agreement Might Be Invalid
• No Written Agreement: Premarital agreements must be in writing to be enforceable.
• Not Properly Executed: Both parties must sign a premarital agreement before the wedding in order for the agreement to be considered valid.
• You Were Pressured: A premarital agreement may not be valid if one of the spouses was pressured by the other (or by his or her lawyer or family) to sign the agreement.
• You Didn’t Read It: If your spouse-to-be puts a bunch of papers in front of you, including a premarital agreement, and asks you to sign them quickly, the premarital agreement may not be enforceable if you sign it without reading it.
• No Time For Consideration: A prospective spouse entering into a premarital agreement must be given time to review it and think it over before signing it. If the groom hands the contract and a pen to the bride just before she says, “I do,” the agreement is probably invalid.
• Invalid Provisions: Although a premarital agreement can cover just about any financial aspect of the parties’ relationship, it cannot in any way modify the child support obligations that either spouse would have if the marriage should end in divorce. Any other provisions of the agreement that violate the law would also be invalid. It is possible, however, that the court would strike the illegal clauses and enforce the remainder of the agreement.
• False Information: A premarital agreement is valid only if it is entered into after full disclosure by both parties — as to their income, assets, and liabilities. If one prospective spouse provides the other with information that is not true, the agreement is invalid.
• Incomplete Information: Failing to provide pertinent information is as bad as providing false information, and it renders a premarital agreement unenforceable.
• No Independent Counsel: Because their separate interests are at stake, both parties to a premarital contract should (and in some states must) be represented by their own attorneys, or the agreement will not be enforced.
• Unconscionability: It’s true that you can agree to give up your right to inherit from your spouse, which you would otherwise be entitled to do upon your spouse’s death, even if he or she left you out of a will. You can sign away your right to spousal support if you should end up in divorce court, even if your spouse makes ten times as much money as you do. You can even agree that your spouse gets all of the property and you get all of the bills, if that is what you want to do. But if the agreement is so grossly unfair that one party would face severe financial hardship while the other prospered, the court is unlikely to enforce it. Basically, “unconscionable” contracts are generally found invalid, and premarital agreements are no exception.
Premarital Agreements Protect Your Estate in Utah, an Equitable Distribution State
Utah is an equitable distribution state. This means that in the absence of a premarital agreement, all property acquired during marriage (with certain limited exceptions) is marital property and would be subject to an equitable distribution upon divorce. A prenuptial agreement can override that presumption if it is stated in the agreement. Prenuptial agreements can also make agreements regarding potential spousal maintenance, division of assets, and division of debt. It is important to contact a lawyer who understands the complexity of these agreements, and who is familiar with the requirements for a valid prenuptial agreement in order to ensure any agreement reached is appropriate and legally valid. It is also important that each party either be represented by counsel, or be given the opportunity to consult with counsel.
Prenuptial Agreements Protect Assets and Investments Even After Marriage
At times it becomes necessary or appropriate to define or negotiate agreements regarding property rights during marriage. Postnuptial agreements may be helpful if, for instance, one party to the marriage is starting a new business with several partners and the partners need clarification on the ownership rights. Both prenuptial agreements and postnuptial agreements, if they have been done properly, make the eventual process of the dissolution go much more smoothly as many of the issues have already been defined.
The Pros and Cons of Prenuptial Agreements
• A prenuptial marriage agreement does not indicate that a couple is anticipating a divorce.
• Financial matters that need to be faced are examined.
• Prenuptial agreements can preserve family ties and inheritance.
• If your future spouse won’t sign a prenuptial marriage agreement, it may be best to discover this before the wedding.
• The financial well-being of children from a previous marriage can be protected.
• Personal and business assets accumulated before your marriages are protected.
• A prenup puts financial expectations out on the table before your wedding.
• A prenuptial marriage agreement spells out which assets a spouse may want to give to children or other family members in the event of death.
• In the event of a divorce, a prenuptial agreement eliminates battles over assets and finances.
• Some people look at creating a prenup as “planning the divorce” before “planning the wedding.”
• They are unromantic and can cause serious friction in the relationship.
• Prenups can give the appearance that there is a lack of trust between the partners.
• A prenuptial agreement could create resentment between spouses.
• A prenuptial marriage agreement makes it seem like there is a lack of a lifetime commitment to one another.
• Prenuptial marriage agreements can be set aside for failure to disclose all assets, or if there is evidence of fraud, duress, unfairness, or lack of representation at the time of signing the agreement.
The Importance of a Prenuptial Agreement
We live in a culture where marriages are not always “till death do us part.” Although most engaged couples imagine that their marriage will be a lifetime of shared bliss and cooperation with finances, the truth is that approximately 20 percent of marriages end within five years and more than 30 percent end within 10 years. This is why it is important to consider all possibilities for the future before you get married You need to protect the assets you held prior to entering the marriage and assert your right to certain assets you and your spouse procure during the marriage. If you have a child from a previous relationship, it is also critical that you protect his or her right to your assets through a prenuptial agreement. A prenuptial agreement is a lot like a homeowner’s insurance policy – although you hope you never have to use it, it can be a lifesaver if you do.
What Can a Prenuptial Agreement Do?
In short, a prenuptial agreement sets rules for the court to follow regarding each party’s interests in the couple’s marital assets in the event of a divorce or one partner’s death. Without a prenuptial agreement in place, the court divides a divorcing couple’s assets according to the principle of equitable distribution, which states that each partner may receive a share of the marital property in accordance with his or her contributions to the marriage and his or her financial and personal needs following the divorce. By setting these rules, a prenuptial agreement can do the following:
• Ensure that an individual’s children from previous relationships receive their share of his or her assets after his or her death;
• Provide for a former spouse after one’s death;
• Limit a business owner’s partner’s access to his or her business-related assets following a divorce;
• Determine which partner may take ownership of specific pieces of shared property after a divorce; and
• Keep specific heirlooms and other pieces of property within a family.
What May be Included in a Prenuptial Agreement?
Issues related to finances and shared property may be included in a prenuptial agreement. In addition to the benefits listed above, a prenuptial agreement can also state how a couple may spend their money after marrying. This can include a clause stating whether one partner may be required to pay for the other’s education expenses or whether the couple will open shared bank accounts. Some issues cannot be predicted ahead of time and, thus, cannot be included in a legally-binding prenuptial agreement. For example, any requirements related to the couple’s future children, such as how many children to have and their custody agreement in the event of a divorce, may not be part of a couple’s prenuptial agreement. Although it is not permissible in many states, you can waive your right to seek spousal support following a divorce.
What a Prenuptial Agreement Cannot Include
It is important to know the limits of a prenuptial agreement because a section that crosses those limits may invalidate the entire agreement. First, you should remember that a prenuptial agreement is essentially a financial arrangement. It shouldn’t extend to your relations with other family members, your decisions about whether and when to have children, or who is expected to do certain errands. Also, no prenuptial agreement can give either member of the couple an incentive for divorce. This means that you should think twice before making a specific arrangement on how to divide property after divorce that appears to clearly favor one spouse over the other. Prenuptial agreements cannot place restrictions on child support, child custody, or any other rights regarding children of a marriage that ends in divorce. Some states go further and prevent these arrangements from including waivers of alimony, or spousal support. Not every state has this rule, so you should consult with an experienced family law attorney in your state if you are considering this option.
Pre-Marital and Post-Marital Agreements
Couples planning to get married may consider making a prenuptial agreement. This document, which is also called a premarital agreement, outlines the property owned by each of the future spouses and the property rights available for each spouse if the marriage ends. Sometimes couples will make this type of agreement after getting married, when it is called a postnuptial agreement. Many couples appreciate the financial clarity that this arrangement can provide, as a valid prenuptial agreement can reduce conflict when a marriage ends in divorce or death. If you choose not to make a prenuptial agreement, your property will be divided according to the laws of your state, which may not produce an outcome that satisfies you. Making a decision about what to do with your property beforehand allows you to avoid uncertainty and the possibility of disappointment. As a preliminary matter, it is often good to talk with your spouse and write down some of your thoughts about certain assets you own and what you would want to happen to them should your relationship dissolve. In some cases, you and your spouse may be able to write the first draft of a prenuptial agreement before consulting a lawyer. Once you have settled on an arrangement with your spouse and drafted an agreement, you should still consult with a lawyer to check that it is valid and give you any relevant advice. When deciding to prepare a prenuptial agreement, many couples may decide to retain individual counsel to ensure they fully understand what rights they may be surrendering. While hiring two sets of lawyers will increase legal fees, having your own lawyer ensures that your interests are fully protected and not compromised by any potential conflicts of interest. Before a court will enforce a prenuptial agreement, it will seek to determine whether the agreement is written, clear and fair. The court will consider many factors, including whether the parties adequately disclosed their finances, were each represented by legal counsel, and voluntarily entered into the agreement free of coercion. The court will also look at the terms of the agreement to see whether the agreement is fair, and not one-sided or unconscionable.
Who Needs a Prenup?
Contrary to popular opinion, prenups are not just for the rich. While prenups are often used to protect the assets of a wealthy fiancé, couples of more modest means are increasingly turning to them for their own purposes. Here are some reasons that some people want a prenup:
• Pass separate property to children from prior marriages. A marrying couple with children from prior marriages may use a prenup to spell out what will happen to their property when they die, so that they can pass on separate property to their children and still provide for each other, if necessary. Without a prenup, a surviving spouse might have the right to claim a large portion of the other spouse’s property, leaving much less for the kids.
• Clarify financial rights. Couples with or without children, wealthy or not, may simply want to clarify their financial rights and responsibilities during marriage.
• Avoid arguments in case of divorce. Or they may want to avoid potential arguments if they ever divorce, by specifying in advance how their property will be divided, and whether or not either spouse will receive alimony. (A few states won’t allow a spouse to give up the right to alimony, however, and, in most others, a waiver of alimony will be scrutinized heavily and won’t be enforced if the spouse who is giving up alimony didn’t have a lawyer.)
• Get protection from debts. Prenups can also be used to protect spouses from each other’s debts, and they may address a multitude of other issues as well.
If You Don’t Make a Prenup
If you don’t make a prenuptial agreement, your state’s laws determine who owns the property that you acquire during your marriage, as well as what happens to that property at divorce or death. (Property acquired during your marriage is known as either marital or community property, depending on your state.) State law may even have a say in what happens to some of the property you owned before you were married. Under the law, marriage is considered to be a contract between the marrying couple, and with that contract comes certain automatic property rights for each spouse. For example, in the absence of a prenup stating otherwise, a spouse usually has the right to:
• share ownership of property acquired during marriage, with the expectation that the property will be divided between the spouses in the event of a divorce or at death
• incur debts during marriage that the other spouse may have to pay for, and
• share in the management and control of any marital or community property, sometimes including the right to sell it or give it away.
Making a Valid Prenup
As prenuptial agreements become more common, the law is becoming friendlier toward them. Traditionally, courts scrutinized prenups with a suspicious eye, because they almost always involved a waiver of legal and financial benefits by a less wealthy spouse and they were thought to encourage breakups. As divorce and remarriage have become more prevalent, and with more equality between the sexes, courts and legislatures are increasingly willing to uphold premarital agreements. Today, every state permits them, although a prenup that is judged unfair or otherwise fails to meet state requirements will still be set aside. However, because courts still look carefully at prenups, it is important that you negotiate and write up your agreement in a way that is clear, understandable, and legally sound. If you draft your own agreement, which we recommend, you’ll want to have separate lawyers review it and at least briefly advise you about it otherwise a court is much more likely to question its validity.
How to File a Prenuptial Agreement
• Prenuptial agreements were once thought to only be used by wealthy individuals. With divorce rates at an all-time high and relationships often consisting of two working individuals, all that has changed. Prenuptial agreements are now seen as a practicality and are therefore more commonplace. Creating an agreement can save both parties from undue stress, complications and lengthy court battles if a divorce comes at some point in the future. No one likes to think of divorce before the white dress has even been fitted, but considering all future possibilities is a smart move for everyone.
• Talk to your spouse-to-be and make sure you both agree on signing a prenuptial agreement. Be open and honest about your concerns, intentions and feelings regarding the agreement. Prepare a list of the things each of you would like to see in the document before consulting with a lawyer. It will save you time and money to have some sense of agreement before going to a legal office.
• Obtain legal counsel for each of you. To best protect your individual interests, you should each have your own attorney. Take your written ideas with you to the consultation. The lawyers may have suggestions for alterations based on their experiences, but having ideas on paper will speed up the process and make it easier to draft an agreement both of you will approve of. Highly complicated agreements could take several drafts, so be sure to give yourself plenty of time before the wedding to get this completed.
• Take the final document to a notary public. In order to stand up in court, the document must be signed, witnessed and notarized by a licensed authority. You should obtain at least two copies of the agreement, one for each of you. Some people prefer to have three or four copies to give to neutral parties for safekeeping.
• Do not file the document with the courts. It does not require court authorization to be valid and only needs to be filed within the court system if divorce proceedings occur. Instead, file the finalized and notarized draft in a safe place of your choice. Many lawyers suggest a fireproof safe as the best option and filing copies in two or more different locations.
• Check with your state laws to see if it requires prenuptial agreements to be updated. Since individual finances can change drastically from year to year, some states require agreements be updated or they will not stand up in court. If necessary, re-file as directed by your lawyer.
Requirements for A Valid Prenuptial Agreement
You don’t have to visit an attorney to draft a Prenup Contract, but Prenuptial Agreements must be in writing to be legally valid. It is in your best interest to use a Prenuptial Agreements form that has been reviewed by an attorney rather than creating one completely from scratch. Many individuals utilize online Prenuptial Agreements legal forms as the basis for drafting their agreements.
Additional requirements for valid Prenuptial Agreements include:
• Both parties must voluntarily execute the agreement.
• Both parties must engage in full disclosure of their respective situations at the time the document is executed.
• Both parties must sign the document in the presence of a notary public.
The agreement cannot be unreasonably unfair to one of the parties. If you are planning to get married and are considering a do it yourself prenup, it is a good idea to look at sample Prenuptial Agreements forms to get ideas about the types of information typically included in these legal documents.
Individuals who are considering drafting a trust or a will may wish to consult with an estate planning lawyer. He or she can explain the advantages of using a trust as well as a will. He or she can make recommendations based on the specific considerations of the client. He or she may even recommend using both documents, such as by using a pour-over will that places any property owned at the time of the testator’s death into the trust.