Monday, January 26, 2009

Preparing for your Prenuptial Agreement

"Love is a temporary madness. It erupts like volcanoes and then subsides."

- Louis de Bernieres

When the loves subsides, people are worried about their financial future. Hopefully, those discussions take place before the wedding. Accordingly, anyone getting married should be contemplating a Prenuptial Agreement. Even if you and your intended spouse ultimately do not enter into a Prenuptial Agreement, the exercise of getting together your financial information and having a mature discussion about your respective financial situations, as well as your financial future, will be invaluable to your relationship.

If you are thinking about getting a Prenuptial Agreement in preparation for your upcoming wedding, the first step in the process is to gather both parties’ financial information. A well-drafted Prenuptial Agreement requires full and fair disclosure. Accordingly, an income/asset/debt statement will be the first step in preparing the agreement. Additionally, if your attorney has a comprehensive understanding of the financial situation before beginning to draft, he or she can be more efficient. Moreover, an in-depth discussion regarding your financial information is an excellent exercise for brides and grooms.

As you gather your financial information, you should also gather back-up documentation. It would be a good idea to set up a file to keep with your copy of the Prenuptial Agreement so that you have records in case the agreement is ever challenged.

As part of your preparation, you should also have an idea of your plans with your future spouse. Do you intend to have children? Do you both intend to continue working? Do you intend to move your primary residences? No Prenuptial Agreement can provide a crystal ball into the future and account for every possible situation that a married couple will face. However, having some type of an idea as to what you plan will help your attorney to at least draft for those situations.

You should look into the enforceability of Prenuptial Agreements in the state where you plan to reside. Different states have different case law and statutes on the issue, as well as requirements.

Think about your debts as well as who has given you gifts. If your parents gave you the down payment on your home, they may not want it back, unless of course, you divorce. If you borrowed money but do not have a valid promissory note, correct that before you marry.

Once you are married, especially if you are the independent spouse (wealthier spouse), in order to be adequately protected by the Prenuptial Agreement, you should comply with its various provisions. By way of example, if a Prenuptial Agreement only protects separately titled assets, realize that property or debt you place in joint names will not be protected.

If you are getting married, even if you are not planning to have a Prenuptial Agreement, this is a good time to gather documentation regarding your net worth. I previously wrote an article on this issue, which you can access here. You should also obtain a credit report on yourself and view your intended spouse’s. Now is the time to learn if you are marrying a saver or a spender.

Best wishes!

1 comment:

Sam Hasler said...

Very good article. I had not thought about the promissory note. Keep up the good work!