Prenuptial agreements help engaged couples prepare their finances and protect their assets if they ever divorce. These contracts are becoming even more important as spouses are more likely to have equal assets or wives own more property than their soon-to-be husbands. Couples should take precautions so that their prenuptial agreement protects their interests during divorce property division.
Prenuptial basics
Creating a prenuptial agreement is an excellent opportunity for couples to learn about their assets before they marry and how they may be allocated if they ever divorce. Planning becomes more important as spouses accumulate real estate, investment accounts, stock options, retirement savings, employment grants and other significant assets.
In addition to dividing property a prenup can also set forth how debt will be resolved. Other issues such as spousal support, gifts and business valuation may be addressed.
Be fair
A court may invalidate a prenuptial agreement that is unfair to either spouse or that is excessively harsh. An agreement cannot address child support or visitation or custody rights which are resolved by the court after considering the best interest of the child.
Neither spouse may be left destitute. Prenuptial agreements should not deal with comparatively irrelevant matters such as gaining weight, sexual relations or visits from relatives.
Be open
Courts may also invalidate a prenuptial agreement if a party did not disclose all their assets and debts or submitted fraudulent information. It is unfair and impossible to make financial decision without receiving truthful and complete information.
Attach financial statements for each spouse containing income, assets and debts as of the prenup’s date. A couple may want to address any anticipated future changes in their financial situation from a business sale, contract, or inheritance.
Spouses should keep schedules covering their assets, debts, and income on the date the prenuptial agreement is signed. It is also recommended that they keep copies of brokerage statements, retirement accounts, bank accounts and real estate. Have a detailed record of your business financials before and during your marriage to protect that company.
Don’t rush
Duress is another ground for invalidation. There should be sufficient time before the marriage to discuss, consider, negotiate and draft this contract. Couples should begin discussions, even with an e-mail, at least six months before the wedding.
Legal advice
Each party should have their own independent attorney to help draft and review the agreement. This helps assure that their rights are protected and that the prenup is valid and enforceable.