A prenuptial agreement is a contract between two people about to get married that shows exactly 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. In an article published at Excel Articles Directory, Michigan divorce attorney Jannelle J. Zawaideh discusses categories of people who should consider having a prenuptial agreement, what a prenuptial agreement can do, and other reasons for having a prenuptial agreement.
She notes that a common myth is that prenuptial agreements are only designed for very wealthy individuals and this is not necessarily true. A person who has managed to save $25,000 may be more protective of their little nest egg than someone who has millions.
According to Ms. Zawaideh, 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
- You 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
- 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.
It is essential that the prospective spouses hire separate attorneys It would be in your best interest to hire separate prenuptial attorneys. Without that, there could be a construed conflict of interest. Many prenup agreements have been thrown out because an aggrieved spouse did not have legal representation. The attorneys co-write the agreement with their clients’ best interests in mind.
The author also describes what a prenuptial agreement can do for you:
1. Keep finances separate. Every state has laws designating certain kinds of assets accumulated during marriage as marital property or community property, even if these assets are held in the name of just one spouse. If a couple divorces, or when one spouse dies, the marital or community property will be divided between them, either by agreement or by a court. If you want to avoid having some or all of your individual accumulations during marriage divided up by a court, you can do so with a premarital agreement.
2. Protect each other from debts. Some of us bring debts, as well as assets, to a marriage. If there’s no prenup, creditors can sometimes turn to marital or community property to satisfy the debts of just one spouse. But if you want to make sure that saying "I do" does not mean saying "I owe," you can use a prenup to limit your liability for each other’s debts. Provide for children from prior marriages. A prenup is helpful (perhaps essential) if either of you has children from another relationship and you want to make sure that your children inherit their share of your property. In a prenup, one or both spouses can give up the right to claim a share of the other’s property at death, perhaps in exchange for an agreed upon amount of property.
3. Keep property in the family. If your property includes something you want to keep in your birth family, whether it be an heirloom or a share in a family business, you and your spouse can agree that it will remain in your family, and you can specify that item in your prenup. This can even include property that you expect to receive in a future inheritance. Follow through by making your estate plan. In addition to using your prenup to waive inheritance rights and state your intentions for passing on your property at death, it’s vital that you prepare the estate planning documents — a will, living trust, and so on — that actually transfer your property as you intend.
4. Define who gets what if you divorce. Without a prenup, state law will specify how your property will be divided if you ever divorce. These laws may dictate a result that neither of you wants. You can use a prenup to establish your own rules for property division and avoid potential disagreements in the event of a divorce. In most states, you can also make agreements about whether or not one or both of you will be entitled to alimony. Some states forbid or restrict agreements about alimony, however.
5. Clarify responsibilities during the marriage. Some examples of other matters people have included in their prenups: whether to file joint or separate income tax returns or to allocate income and tax deductions on separate tax returns
- Who will pay the household bills — and how whether to have joint bank accounts and, if so, how to manage them agreements about specific purchases or projects, such as buying a house together or starting up a business
- How to handle credit card charges — for instance, whether you will use different cards for different types of purchases, what kinds of records you will keep, and how you will make payments agreements to set aside money for savings agreements for putting each other through college or professional school
- Whether you will provide for a surviving spouse — for example, in your estate plan or with life insurance coverage, and how to settle any future disagreements — for example, you might agree to hire either a mediator or a private arbitrator.
As in Georgia, the author stresses that 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.
It is also important that to enhance enforceability, an agreement must also be signed well in advance of the wedding. You can not present your significant other with a prenup the day before the big day and think you can rush them into signing it without careful consideration.
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 to plan ahead and have the prenup agreed upon at least one month before the wedding and preferably before the invitations have been sent out to make sure you are both on the same page. Nothing would be more embarrassing than to cancel a wedding after the invitations have went out all because you could not agree on the prenuptial agreement.
A valid prenup also is "fair" and will not leave one of the parties destitute. No matter what state you’re in, the state will look for equity to make sure one spouse is not being taken advantage of.
Finally, she discusses how prenups can include responsibilities that don’t deal with money, but discourages you from 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.