The Basics of Prenuptial Agreements
A prenuptial agreement (also known as premarital agreement, ante-nuptial agreement or prenup) is a written contract made by two individuals before they marry. The agreement typically contains provisions relating to property rights, spousal support and the effects that death and divorce would have on those rights. It is a common misconception that a prenuptial agreement in essence prepares for divorce, but this couldn’t be further from the truth.
Prenuptial agreements are not the equivalent of divorce planning, but rather help you define the rules of your marriage, so that everyone is on the same page when things go wrong . As with all contracts, prenups are highly customizable to the needs of both parties and there are a number of ways to approach this important document, depending on what left and right hands at the negotiating table are holding.
A prenuptial agreement can help protect and preserve your wealth, protect your business, limit your exposure in case of your partner’s bad debt, facilitate wealth planning, limit spousal support upon divorce and provide death benefits if the marriage ends in divorce.
Pros of Working with a Prenup Attorney
Offering a perspective that neither your future spouse nor his/her family member(s) can provide, a prenuptial agreement attorney can help you understand the purposes and advantages of initiating a prenup. Depending on your unique circumstances, your attorney can shed light on why a prenup may not be right for you. With extensive experience in both prenuptial and postnuptial agreements, a skilled attorney can introduce you to the types of contracts that might work best for you. Based on the unique circumstances of your upcoming marriage, your prenup attorney can help you determine which types of contracts to pursue, which strategies to employ and what specific provisions should be included in the contract itself. Because prenups are signed before marriage, they may be challenged in court if one party feels unduly pressured or deprived of a faire opportunity to review and analyze the agreement in question. An experienced attorney can help you establish best practices by allowing time for both parties to consult with their own legal representation before signing and avoiding other common pitfalls that could indicate coercion. If you’re to sign a document that will become legally binding after you’ve vowed to love and cherish each other forever, you need to know that you’ve both given it the careful thought it deserves.
Essentials of a Prenup
At the core of every prenup should be the key details that will enable each future party to make an informed decision about whether or not they agree with its terms. Each must be fully informed about the nature and extent of property and financial disclosures, so that any decisions made in those matters are based on fact rather than fancy.
First, a competent prenuptial attorney drafts the initial agreement, and in doing so must take care to avoid boilerplate provisions. In some jurisdictions, for example, a provision may be deemed unenforceable if it too generally prohibits the alienation of separate property, or there is an inadequate definition of separate and marital property. Further, the level of disclosure about property and financial obligations must be full and fair, otherwise the agreement can be set aside.
That’s not to say every single debt or asset must be disclosed in detail. While a certain level of detail must be included, a fully accurate accounting is not necessary. Future spouses also don’t have to estimate the current value of all their property, if determining that value is too difficult or time-consuming.
The parties should also be aware that a prenuptial agreement will be enforceable, provided it was signed voluntarily, after full disclosure of assets, debts, and the terms were fully understood. New Hampshire law does not require any particular "magic" language in a prenuptial agreement; nor must it be filed with a court or recorded in the registry of deeds. Even a waiver of counsel is permissible, but only if it is done knowingly and in person, not simply by signatures at the time of signing the agreement. It also must be in writing and signed by both parties.
Common Misunderstandings Surrounding Prenups
Many people think of their prenup and immediate association is that it indicates their relationship is doomed to failure. Or they think it is a way to protect themselves from potential financial implications should their spouse get injured in a car accident. None of these statements constitute the reality behind prenuptial agreements. As the old adage goes: "nothing could be further from the truth."
In fact, prenuptial agreements can serve to lay out financial expectations in the event of divorce or death, but they can also prevent financial difficulties in the event one of the spouses suffers a disability or injury.
Prenups don’t always have to do with death or divorce. They can be used to protect people financially if something bad befalls them or their spouse. For example, if your spouse is in a car accident and suffers a catastrophic injury, on top of having to deal with the disability itself, they also may be responsible for a lot of debt, if they were at fault for the accident. Or they may find themselves in a position where they are unable to pay their tax bill, which results in years of garnished wages.
Having a prenuptial agreement in place may prevent them from having their wages garnished, while at the same time protecting you from falling into bankruptcy because of the added tax bill and the loss of income.
Prenups offer an incredible amount of protection for both spouses. And they are not just for the wealthy or the divorce-minded. They can often provide a lot of security for both spouses in the event of tragedy, while also protecting their assets.
How to Select the Best Attorney for Your Prenup
When it comes to selecting a prenuptial agreement attorney, consider the following criteria in the process:
1. Characteristics or Qualifications
You likely did not choose your current attorney because you liked his or her hair or rode the same brand of bicycle that you do, so why would you choose a prenuptial agreement attorney because of those same reasons? You should consider his or her background, experience and qualifications. The prenuptial agreement attorney you decide on is potentially going to affect the rest of your life, so make sure you ask probing questions to get the information you want to make the best decision for your future.
2. Experience
Your prenuptial agreement attorney should have a vast amount of experience assisting other people in creating prenuptial agreements, along with a great deal of knowledge to know whether or not certain clauses comply with state laws. Most states will require that both of you be represented by a different prenuptial agreement attorney to ensure that the agreements are fair and equitable, so make sure that he or she has a great deal of experience when it comes to negotiating the terms of the contract.
3. Approach
What’s your attorney’s approach to prenuptial agreements in general? Does he or she think there’s value in prenuptial agreements or believes that most are only set up to benefit one party? Essentially, you want to know how your attorney approaches the subject before providing him or her with more details about yourself and your situation . At this stage of the prenup process, it’s best if you don’t get into the minutia of discussing your specific situation as you are still gathering information on this person to determine if you want to select him or her as your attorney.
4. Cost
Prenuptial agreement attorneys are going to cost you money, so this is going to be a major factor in deciding on an attorney. As a consequence, you should start by asking the attorney to provide you with an estimate of the costs to draft the agreement. Review the terms of payment for the attorney, such as flat fees, hourly rates, payment terms and retainer fees. Then review that information with your spouse to be and have that individual come along to the next meeting. After this meeting, review any additional information compiled from both of your comments to make sure nothing has changed.
5. Arrange for Additional Consultation Meeting
If at this point you are happy with your prenuptial agreement attorney and feel comfortable with him or her, then make arrangements for him or her to meet with both of you together.
6. Prepare Questions
When your attorney comes to meet with both of you, have several questions written down. These questions should address the following: It’s very important that you feel comfortable with the information you have after your meetings, so it’s important to trust your gut in the end and go with an attorney that feels right to both of you.
Drafting a Prenup
When embarking on the journey of drafting a prenuptial agreement, it is essential to navigate the process with the expertise of a qualified attorney. An attorney with experience in prenuptial agreements can be a tremendous asset in terms of understanding how to structure the agreement, assessing the asset allocation that you may have questions about and representing you to be sure that your interests are protected throughout the entire process.
The first step is to schedule a consultation with an attorney experienced in these types of agreements. During this consultation, you will discuss your assets, debts, and other financial information, including your expectations from the prospective agreement. The attorney will also be able to answer any questions you may have about various provisions of a prenuptial agreement in general.
Once you’ve retained the attorney, that attorney will then draft a preliminary version of the agreement, which will be used as a template at the next consultation. You and your attorney will review the initial draft to determine if there is anything you believe should be modified or added in the agreement.
After this consultation, you and your attorney will make the necessary edits to the draft, and will then send it to your fiancé/fiancée for their attorney to review. The fiancé/fiancée will then review the draft and speak with his/her attorney about any modifications to the prenup that may be necessary. It is important to remember that the attorney hired by your fiancé/fiancée probably has experience in this area as well, and will be looking out for their client’s best interests.
Once both parties have agreed to the phoenix prenuptial agreement, they will each sign the document. It is important that both parties execute the agreement, as this will ensure that it is valid if divorce proceedings are ever commenced.
With the help of an experienced purveyor of prenuptial agreement services, both you and your fiancé/fiancée can feel more comfortable with the prospect of getting married, knowing that you have each taken the right steps to protect yourselves and your assets in the unfortunate event of a separation or divorce in the future.
Legal Aspects and Variations by State
It is important to understand that prenuptial agreements laws vary by state and may have specific requirements depending on the jurisdiction. Couples should be aware of what is necessary for an agreement to be valid and enforceable in the state in which it is being drafted, as well as in any state where they may reside at the time the divorce is commenced.
Statutory requirements include, but may not be limited to:
Statutory Enforcement for Common Law Jurisdictions
Separately, as prenuptial agreements are essentially contracts, contract law applies in each state and those laws may vary.
Several factors in particular should be considered by those seeking to enforce a prenuptial agreement, including:
All of these factors can differ between states and make a difference in the outcome of a prenuptial agreement’s enforcement. In some states, the threshold analysis for granting enforcement of a prenuptial agreement is whether the terms are unconscionable, meaning whether the terms are so one-sided, including considering the parties’ or each party’s needs, that they are shocking to the court. In other states, a prenuptial agreement will be enforced if the agreement was signed voluntarily by the party against whom enforcement is sought. In others, an additional analysis might include full financial disclosure and a compelling reason.
As mentioned above, some states also require separate representation in order for the prenuptial agreement to be enforceable. Separately represented means that each party had their own attorney, in addition to any joint representation.
What all these variations will lead to is divergent results. If you are in a state that does not require separate representation, and your partner does not want to separately engage counsel, your alternative is to engage counsel who can represent both of you – in a limited scope representation, meaning only with respect to the prenuptial agreement – OR you can use a mediation model in which both parties meet with a mediator and negotiate the agreement, again with the full knowledge that you may not be able to use the mediator to help you in the event of a divorce.
Amending and Updating Your Prenup
Prenuptial agreements should not be perceived as static, unchanging documents. The individuals involved should act as "co-owner" or "co-author" of the agreement to ensure it remains relevant and effective long after the marriage ceremony has been completed. Several factors can cause the need for modifications to a prenuptial agreement: If any of the above situations occur, the individuals should review their prenuptial agreement to determine if any changes should be made to the document. There are two general approaches to making changes to a prenuptial agreement. Several prenuptial contracts contain a provision that commits the individuals to a regular review of the document over certain periods of time, perhaps every three or five years . This approach enables the couple to make any necessary adjustments to the document in recognition of the passage of time and the inevitability of change. Alternatively, the individuals may simply remain attentive to the document to the extent that they will notice if any changes are needed due to factors like those discussed above. The question of whether to adopt a proactive or reactive approach depends on the preference of the individuals when negotiating the terms of the prenuptial agreement. Obviously, the proactive approach would minimize the likelihood of trying to address these issues only after they arise.