TIP: Both people should feel they gain from the marital agreement.
Embarking upon a marriage is a wonderful time in life—emotions are running high and you have great optimism about the future you will build together. The last thing you want to do is jeopardize your love by discussing mundane things like who brings home the bacon, who cooks it and who cleans up after. But what better time to talk about equality in marriage than when the two of you have never felt closer? You both need to commit to equality in marriage from the start. It is particularly important to create a prenuptial agreement (also referred to as premarital agreements and marriage contracts) that reflects equality in financial matters.
Asking each other serious questions about how you see finances in the marriage partnership may save you pain and money later – and might even save your marriage. We agree it’s tough – not to mention unromantic – to discuss splitting assets and assigning debts before you reserve the wedding hall, but don’t be shy about bringing up the subject. What could be more romantic than to spend several hours together looking ahead to the rich and wonderful life you will build together and discussing how you will make your dreams come true?
We’ve compiled the “nuts and bolts” of prenuptial agreements to help you and your partner become more familiar with what a prenuptial agreement is, what states they are valid in, and what to include in one.
The Commitment Conversation
Before we continue to outline these legal agreements, let’s take a step backwards and acknowledge that prenups are simply the joint expression of a couples’ wishes.
What is a prenuptial agreement?
A prenuptial agreement is a private agreement between two persons contemplating marriage. The couple generally settles, in advance, financial matters in the event of death or divorce.”Lifestyle” or non-financial topics also may be included. The contract overrides and preempts state, family and probate laws that otherwise would apply.
There are three basic rules that should be followed to safeguard your agreement: full and fair disclosure, separate and independent counsel, and ample lead-time before the wedding.
The agreement must be “fair and reasonable”, meaning you both have to offer full and fair disclosure, have separate and independent counsel, and make sure there is ample lead-time before the wedding.
What states are they valid in?
Prenuptial Agreements are valid in all 50 states and the District of Columbia. It doesn’t matter whether the state is a community property state or an equitable distribution state. Since 1983, at least 26 states have enacted a variation of the Uniform Premarital Agreement Act or UPAA, which encourages the enforcement of prenuptial agreements. The exact UPAA standards differ from state to state so be sure to check out your state Bar Associations’ website for details.
Those states who have enacted the UPAA are: Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Minnesota, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Rhode Island, South Dakota, Texas, Utah, and Virginia.
What should be included in a prenup?
In order to best safeguard your union, there are certain key issues you should include in your prenup. Be sure to review the following with your soon-to-be spouse:
- List all assets, liabilities, income, and expectations of gifts and inheritances.
- Describe how premarital debts will be paid.
- Resolve what happens to your premarital property in reference to appreciation, gains, income, rentals, dividends and proceeds of such property- in the event of death or divorce.
- Decide who, or if both of you, will own the marital residence and secondary homes in the event of death or divorce.
- Specify the status of gifts, inheritances, and trusts either spouse receives or benefits from, whether before or after marriage.
- Clarify what will happen to each type of property, whether jointly or individually owned, such as real estate, artwork and jewelry.
- Figure out alimony, maintenance, or spousal support, or provide for a waiver or property settlement instead of support (to the extent allowable by law).
- Detail death benefits, stating what you will provide for in your will.
- Decide on medical, disability, life or long-term-care insurance coverage.
Remember: Some people may be hesitant to enter a prenup with their beloved, because they believe it destroys the romance and fantasy of their upcoming marriage. A prenuptial agreement, however, gives a couple an opportunity to share their hopes and dreams with one another and articulate their aspirations. The best chance of living up to one another’s expectations is knowing what they are in advance and finding out what it is that your partner holds dear. A prenup can intensify the pleasure of a relationship by drawing out the couple’s desires, promoting communication and enabling partners to establish for themselves the rules of their marriage. By virtue of this process, a prenup protects the romance that launched the couple and makes happily-ever-after more likely. A relationship based on reality is stronger than a relationship built on illusion.