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Prenups – Do you really need one?
Congratulations, you are about to take the next steps in building your life together with your partner. You might be wondering if you need a prenuptial agreement or may be worried about what conversations have to be had in order to put one into place.
In my experience, people should consult an attorney before they get too far into the idea of getting a prenuptial agreement. It may actually be better to consult with an attorney first before you bring it up with your partner. It may be that you decide not to pursue the prenup after talking with a lawyer and you never that have that conversation with your partner.
I typically encourage people to think twice about whether they need a prenup or not – no matter what the situation may be.
Are your assets already protected?
I think sometimes people pursue a prenuptial agreement even though it may not be absolutely necessary. Occasionally, the property that they want to protect is already considered separate property. Separate property is property owned before the marriage or property acquired after a marriage but via an inheritance, as a beneficiary of a Will, or as a recipient of a gift. If the property is separate property, the prenup is likely not necessary. It might not be needed for some people if they’re going into their first marriage and they’re pretty young, or if either spouse doesn’t have any significant assets to protect. From what I’ve seen in my 30 years of family law, prenuptial agreements typically apply more appropriately to people who are older, going into their second marriage, and they have significant assets they want to protect (for one or both parties).
One example comes to mind of where a couple of young professionals in which the husband had been pursuing his career for approximately 4 to 5 years longer than the wife. The husband had some assets prior to the marriage, nothing too extensive, that he wanted to include in the prenup. The truth is, the assets were already his separate property and were protected without the agreement. They would remain his separate property if they were not mixed or commingled with community property assets (“joint” assets). In the end, the couple decided that a prenup wasn’t necessary and would potentially interfere with their marriage. It’s all about being aware of what exactly you want to protect and consider how it might affect the relationship when it comes to talking about topics like money.
What is the intention of the agreement?
If you are in a second marriage or have a lot of assets that need specific delegation, make sure that the intention of the agreement benefits both parties and not just one side. For example, a prenuptial agreement was put in place for a couple where the husband was entering his second marriage while the wife was entering her first. The wife signed an agreement that essentially would allow the husband to keep everything he had before the marriage – which would have applied to most of his assets without a prenup. However, this prenup also listed that all future earnings of the husband would be considered separate property not community property. This document was very one sided by stating there would only be separate property, and no community property.
Previously, the couple decided that the wife would be a stay at home mom. So arguably, all of the assets on hand at any time would likely be considered the husband’s assets and not subject to division by the Court in the event of a divorce. The couple was having marital problems already that the prenuptial agreement only exacerbated. It was a source of frustration for the wife and was a topic of conversation in the counseling sessions. The wife could not trust the husband because of the one-sided prenup. The situation became very tense and could have lead to divorce. If you are unsure if an agreement is too one sided and how to best approach making it beneficial to both parties involved, consider seeking legal counsel.
When should we get a prenup?
Some advice that I can provide here is – don’t rush, don’t do it last minute, and make sure you plan with your partner in advance. It’s always important to discuss the prenup with your soon-to-be spouse, so you can work out any possible issues. If you approach the idea too close to the marriage, it may put unneeded pressure on the spouse and have some impact on the enforceability of the agreement later on. It would be best to have the discussion at least 3 to 4 months prior to the marriage to allow for there to be time to work through any issues. Preferably more time.
Whether or not you decide to go forth with the prenup, the bottom line is – prenuptial agreements are not 100% ironclad or enforceable. Depending on the facts and circumstances of your contract, your agreement may be subject to future attack. There are some limited defenses or attacks that can be used against the enforceability of these agreements. It is wise to consult with a knowledgeable attorney.
If you want to makes sure that a prenuptial agreement is applicable to both parties or it’s a good fit for you, contact us today.