Information on Prenuptial Agreements

Prenuptial agreements can provide protection for both parties and may be as simple or complex as the couples choose.

A prenuptial agreement is a contract between two individuals that outlines the financial details of a marriage that may dissolve at some point in the future. Attorney Warren Shiell of Beverly Hills, California, states that both parties should have legal representation. He also states that the parties should draw up a fair prenuptial agreement that does not leave one individual without adequate support if the marriage is dissolved.

Function

Many times a partner who has more wealth or a higher earning power than the other person may request a prenuptial contract. Many people who have children remarry and can use the prenuptial contract to ensure that, in the event of their death, the division of their assets proceeds in a manner that represents fairness for both families. In addition, some people use it to avoid responsibilities for the debt of another person, to protect a business or keep a spouse from contesting an estate plan.

Features

A prenuptial agreement may consist of four or five pages or a 100 or more pages. The provisions contained in the agreement are decided upon by the couple. Many agreements include information on sources of income, assets and liabilities, gifts, inheritances and other items deemed by the couple as important. The agreement many work out who gets the primary home, vacation homes, and other real estate if one partner should die or the marriage break up. It also deals with property brought into the marriage, its appreciation, and income or other earnings received from the property.

Considerations

One of the primary items to contemplate before constructing the agreement involves state law. California and a few other states classify income, asset, or property accumulated during the marriage as "community property." This means a 50/50 split of these properties regardless of the efforts of the individuals. The majority states jurisdictions have "equitable distribution" where the court decides fairness and divides assets accumulated during the marriage.

A prenuptial contract represents a binding contract that can supersede state law. Elliot Wiener, a New York matrimonial and family law attorney with the firm Phillips Nizer, states that a prenuptial contract allows people the flexibility to do "anything they want with the property as long as they agree to the terms and the agreement is fair."

Time Frame

Couples have the choice of deciding on the duration of prenuptial agreements; some elect to include a provision that makes the contract or specific clauses invalid after a certain number of years. In Maine, the contract expires after the birth of a child, but the couple may opt for an extension. Some states have statute of limitations regulations for filing claims. New York State requires claims related to prenuptial contracts to commence within three years of divorce action or annulment.

Expert Insight

Birmingham, Alabama attorney Lee Borden cautions couples not underestimate the consequence of using assets defined as separate in a prenuptial agreement for marital uses. For example, if one partner uses assets from a personal account to buy a house or pay other marital expenses, he or she risks the account being designated by the court as marital property in case of a claim made later.

References

• California Divorce and Family Law: What to Cover in Your Prenup
• Prenuptial Agreements
• Los Angeles Divorce and Family Law: Prenuptial Agreements
• Phillips Nizer: Matrimonial & Family Law

Resources

• Divorce Law Firms: Can Prenuptial Agreements Expire? Is There a Statute of Limitations?