Let’s Get Real About Prenups: I Hate Talking About Money!
As Family Law attorneys, we are frequently asked about prenuptial agreements, commonly referred to as “prenups.” The following are some of the more common questions.
What is a Prenup?
A prenup is an agreement between a couple intending to marry. To be valid in the Commonwealth of Virginia, a prenup needs to be in writing and notarized. It does not become enforceable until the couple actually marries. The timing is important – a prenup needs to be signed close to the wedding or it can be considered “stale” and risks being unenforceable, but it also needs to be at least 30 days in advance to avoid a claim of duress.
The purpose of a prenup is to resolve certain issues that may come up during the course of the marriage, and, more particularly, addresses these issues before a divorce or death occurs. Most commonly, prenups address ownership of property, allocation of debt, alimony in the event of divorce, taxes, life insurance, and business interests.
Why get one?
In addition to the protection of assets in the event of death or divorce, there are three reasons to get a prenup.
- By entering into a prenup, you are resolving issues before they arise at a time when you have both your own and your future spouse’s best interests at heart.
- A prenup gives you a say in resolving these issues instead of leaving the resolution to a judge in divorce court. In a divorce without a prenup, legal standards for many important questions will be resolved according to state law instead of your specific wishes.
- You need to consider protecting other parties. Parents, former spouses, children from a prior marriage, future children and business partners can all be impacted by your new marriage.
What if I HATE TALKING ABOUT MONEY?
A prenup does not have to be, and in fact should not be, an adversarial process. It used to be a sensitive topic, but people marry later in life now than they did in past decades. It asks a couple to contemplate the nuts and bolts and possible death of the marriage when they are busy being in love, Questions of assets and debt are not exactly romantic, and often, there is an imbalance in the financial situation of the couple that makes the conversation challenging if the parties have differing views on issues such how the family duties might change if someone makes a career change. Some lawyers take their role as counsel and advocate to mean that they should aim for a beneficial outcome for their client that doesn’t take the needs and feelings of the other person into account. However, there is another way. There can be a collaborative process where the attorneys and advisors work to help the couple contemplate their prenup as a team. The key is to have a process that includes open discussions of the issues in play. Experienced counsel can help the couple navigate the sensitive topics and propose provisions that feel fair and balanced.
What Should I Consider Including?
While a prenup is whatever the couple want it to be, there are a number of topics that can be addressed and resolved in the agreement:
- Premarital assets and debts – how will they be allocated in the marriage. Will they stay separate or will they become part of the marital estate?
- Marital property. Will everything be owned 50/50, or will there be another arrangement?
- Management of assets and income. How will you manage your martial property and separate property?
- Credit and debt. How will premarital and marital credit and debt issues be handled.
- Expectations of jobs and income, non-monetary contributions and retirement.
- Spousal support/Alimony. What are your expectations about limits, duration and other aspects?
- Gifts from families: How will these be treated? As martial or separate property?
- Will you be filing jointly or separately? Is there old tax debt?
- Higher education. Student loan debt, increased earning capacity, and other issues related to obtaining a degree.
- Duration of prenup. Is there a sunset? Does having children change this issue?
- Business ownership. How do you allocate income and debt, and ownership of a business entity?
- Is there a different outcome in the event of some specific form of fault?
- Death or disability. Issues of property division, insurance and timing of the occurrence of one of these events can be addressed.
Prenups are an important step for couples to consider before they marry. If you want to discuss whether a prenup is right for you and your partner, contact us here to set up a consultation.
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