An Overview Of Prenuptial Agreements: Practical Do’s and Don’ts
Talking about a prenuptial agreement with your future spouse is never a pleasant topic. The conversation can be awkward and uncomfortable, and can result in hurt feelings. However, given the unexpected nature of the future, many couples choose to move forward with a prenuptial agreement because it can offer some certainty and peace of mind. If you are considering a prenuptial agreement, here are some helpful tips for an uneventful and smooth process.
Don’t Wait Too Long to Start the Process. If you are planning to get married and you are considering a prenuptial agreement, contact an attorney and begin the process well in advance of the wedding date. This recommendation is made for several key reasons:
Negotiating in the days prior to the wedding often results in a party (even the party trying to protect assets) making concessions and agreements that are not to their benefit in order to finalize an agreement under time pressure.
Costs of attorneys can significantly increase under time pressure as everyone works to finalize the agreement.
In rare instances, it is possible that it simply might not be finalized in sufficient time and then a party is left to decide if they should delay or postpone a wedding or proceed without an agreement.
While a short amount of time between the execution of an agreement and the date of the wedding alone may not be a basis for a court to find an agreement invalid, it is possible. Regardless of the ultimate determination, a shorter drafting period can cause the agreement to be less “air tight” which could lead to expensive and time consuming litigation.
It can result in unnecessarily emotional and exhausting days leading up to a wedding that can leave a bad feeling for couples and even impact their wedding day and marriage.
Do Be Prepared When You Meet With Your Attorney. When preparing to meet with your attorney, it is helpful to have a balance sheet identifying your assets and liabilities and two (2) years of tax returns. Think in advance about your goals and limits so your initial conversation can be productive. Also know that an agreement can address both: (i) what will happen in the event of a divorce and; and (ii) what will happen in the event of the death of a party during the marriage It is a good idea to think about whether you want to cover both possibilities in your agreement or just one.
Do Make Sure Your Agreement Will Be Upheld. While this is of course your attorney’s job, you should know and understand the basics to ensure your agreement will be valid (The tips in this Article are based on Illinois law, which has enacted the Uniform Premarital Agreement Act. You should have your attorney explain the laws of your State):
The agreement must be in writing and signed by both parties. It is often recommended that signatures be notarized and witnesses present as well.
Although not required, it is preferred (and I always insist) that both parties have attorneys.
The agreement must be executed voluntarily and free from fraud, duress and undue influence, meaning that both parties have to understand the agreement and agree to sign it.
Both parties must provide a “fair and reasonable disclosure” of their property and financial obligations. I also recommend that the agreement include language that the parties agree that the disclosure provided was sufficient and they require nothing beyond what was provided.
The agreement must also be conscionable. Generally, this means it must be fair and reasonable.
The agreement cannot address child custody or child support.
Don’t Forget to Complete Any Follow-Up Required After the Agreement is Signed. Once your agreement is signed, do not forget to complete any following up. Specifically:
It is vital that you keep the agreement in a safe place. This may seem self-evident, but I have been involved in more than one case where an agreement could not be located.
Have any estate planning documents required or contemplated prepared and completed.
Have any waivers of retirement or other benefits executed. Certain retirement benefits can only be waived by a spouse; therefore, they cannot be signed until after the marriage ceremony. It is important to follow-up on this.
Make sure you follow any provisions of the agreement that govern your actions during the marriage. For example, some agreements dictate how parties will file and pay their taxes, that certain accounts will be created, or assets titled in a certain way. It is important to make sure you know and followany dictates of the agreement required during your marriage.
In the unfortunate case of a divorce, make sure you provide your divorce lawyer with a copy of your agreement immediately.
Being engaged is a blissful time, and no one wants to think about preparing an action plan should the marriage not work out. However, prenuptial agreements are similar to insurance. A prenuptial agreement ensures that should things not turn out the way you planned, at least the legal part of the divorce becomes much simpler and quicker, leaving more time for focusing on healing.
Amanda B. Clayman is a partner at Katz & Stefani.