What to Consider When Obtaining a Prenuptial Agreement
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Introduction The process of divorce can be a costly and emotionally fraught endeavor. You will need to divide up a shared life when you dissolve a marriage, and the process can be difficult. You and your spouse may try to come to an agreement on how child custody and marital assets and debts should be divided, but it can be difficult to compromise with someone when you are unable to get along well enough to stay married. You can ask the courts to divide your property, but this can be expensive and result in an outcome no one likes. To save yourself a great deal of hassle and stress, and to protect yourself from significant financial loss, it is best to come to an agreement on what will happen in the event of a divorce very early on in your relationship. In fact, a prenuptial agreement allows you to protect your assets and determine most of the terms of your divorce even before you marry. While a prenuptial agreement can be a great thing to have, there are some legal pitfalls and some problems you may face when drafting the agreement.
To help get you started, here are a few key things you need to consider when obtaining a prenuptial agreement: 1. The willingness of your future spouse to sign. Some people are concerned that signing a prenuptial agreement means that the marriage is unlikely to last or that you don’t have confidence in your union. This is simply untrue. Signing a prenuptial agreement is like a form of insurance - you hope divorce never happens and do not plan for it to, but you want to protect yourself on the chance that it does. It is financially smart for both parties to have an agreement in place, and both spouses can benefit from the protections a premarital contract provides. You should be sure to broach the discussion of a prenuptial agreement when you begin to seriously discuss marriage so your intended spouse is not surprised. You should be sure to discuss the positives of the contract for both parties when you bring up the topic.
To help get you started, here are a few key things you need to consider when obtaining a prenuptial agreement: 2. The enforceability of the prenuptial agreement. It does not help you to create a prenuptial agreement that is not going to be enforced if your marriage ends. A contract you believe is binding could be set aside as a result of a technical error like referring to the wrong section of the Family Law Act. Your prenuptial agreement could also be declared unenforceable if it is challenged and you cannot prove there was no undue inuence used to coerce your spouse to sign. It is best to ensure the agreement is signed well before the wedding and that the contract is fair to both parties- this maximizes the chances of the agreement being enforceable. It is also a good idea for both parties to be represented by an attorney when the agreement is being negotiated. If each spouse has a lawyer advocate for him or her during the process of drafting the agreement, and the lawyer reviews the contract before it is signed, it will be much harder for either spouse to argue that the contract should later be declared invalid.
To help get you started, here are a few key things you need to consider when obtaining a prenuptial agreement: 3. The disclosure of your assets. Your spouse needs to be aware of your assets and income at the time when the premarital agreement is drafted or else the agreement could be set aside in the future. You should document clearly that you have made full disclosure so that it is more difďŹ cult for your spouse to later make an argument that he or she was misled or that assets were kept hidden.
4. How to protect your current assets and your separate property. If you are going into a marriage with signiďŹ cant assets or a lot of property you own, you should be sure to include provisions in the premarital contract that will allow you to keep your own accounts and money when you leave a marriage. You also need to be careful to avoid co-mingling these separate properties and assets when you are wed or you could lose some of the protections inherent in the premarital contract. Be sure the contract provides detailed descriptions so it is clear what property was yours.
To help get you started, here are a few key things you need to consider when obtaining a prenuptial agreement: 4. Expectations about future income, assets and inheritances. If you will be earning significantly more than your spouse, if you are starting a business, or if you expect to inherit a significant sum of money, you should be sure that your prenuptial agreement addresses future assets. If you do not include clauses related to spouse maintenance or future ownership of the business you plan to grow, your spouse could end up owning part of your company and getting a significant portion of your monthly income.
5. How your circumstances may change over time. You may plan to have children born to the marriage, or plan to acquire property together. You should consider including provisions in your premarital agreement that address events that could happen in the future. For example, you may wish to have assets divided differently if you divorce after a child is born versus if you divorce early on before you have any shared children. A well-drafted contract can provide for different spousal maintenance and property division based on how long the marriage lasts, how many kids you have, or other relevant factors.
6. Responsibility for debts. If your spouse has significant debts going into the marriage, you may wish to use a premarital agreement to try to protect yourself from becoming responsible for these financial liabilities.
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