On behalf of The Marks Law Firm, L.L.C. posted in Prenuptial Agreements on Wednesday October 30, 2013
We live in a time where at least half of all marriages end in divorce. Many people, fully aware of the odds, want to protect themselves going into the marriage. Often future spouses come from different backgrounds, whether financial, cultural, religious or otherwise. Rather than be caught off guard in the future, individuals on the threshold of marriage want some assurances if things do not work out.
People enter prenuptial (also called antenuptial) agreements overs money. If one person goes into the marriage with more money than the other, or more earning potential than the other, that person worries about losing what they perceive as an unfair share of that money. Also, some people come from wealthy families and may have trusts or future inheritances at stake and want to protect those interests.
Generally, all income earned during the marriage becomes marital property. So, if one spouse has a family trust that generates income for that spouse, that income could be considered marital property. An inheritance usually remains separate property; however, a spouse can convert that property to marital property. For example, suppose one spouse inherits a family home and prior to moving into the house, titles the new home jointly in the name of both spouses. That spouse just converted separate property to marital property.
Property issues can be a concern for other reasons too. One spouse may have been married before and has children from that marriage, and that spouse may want to protect the financial welfare of those children from any dilution by the new spouse. Or conversely, the spouse without the prior marriage and children may want to avoid assuming financial responsibility for the other spouse’s children.
Given all of these potential financial concerns, one or even both parties contemplating marriage may want to avoid confusion in the event of dissolution by reducing to a written agreement what property remains separate and how marital property will be distributed.
Should you sign such an agreement? Would a court enforce the agreement in the event of a divorce?
In Missouri, no prenuptial agreement will be enforced if the parties did not make full disclosure of their assets and had the opportunity to consult with an attorney prior to entering the agreement. Once you have had full disclosure and you have met with an attorney, generally the agreement is enforceable, unless it is so one-sided as to be considered unconscionable.
Most people entering a prenuptial agreement do not give serious enough thought to some of the consequences. For example, a wealthy individual may not realize the agreement fails to insulate that wealth in the event of divorce, or the lesser earning spouse may not realize that the property structure gives too much of the marital earnings to the higher earning spouse. Only consultation with a skilled and experienced attorney stands between an unwitting spouse and potential financial disaster.
Closely related to property is spousal support or maintenance. Sometimes, a wealthy spouse may try to “buy off” the less wealthy spouse in the prenuptial agreement, trading a marital share in assets for a specific amount of maintenance that could grow if the marriage lasts a certain number of years. An ill-informed spouse could lose her future claim to both maintenance and marital property, so long as the disclosure and attorney consult took place and the agreement is not too one-sided.
No attorney can tell you with certainty whether to sign a prenuptial agreement – ultimately that remains your choice. But an experienced and skilled attorney will tell you whether you are making a poor choice and inform you of exactly what you would lose in the future.
What about child custody and support? Parties can reduce their wishes as to custody and child support to writing, but should know that the court need not follow that part of the prenuptial agreement. Instead, the court may always ignore the stated wishes if the current conditions at the time of the divorce indicate those wishes are no longer in the best interest of the children.
Prenuptial agreements can reduce surprise and conflict in the event of divorce and actually take a great deal of stress out of the marriage by not worrying about finances. But these agreements can also deprive one spouse of a great deal of money and still remain “fair” for enforcement purposes so that trying to “break” the prenuptial agreement at the time of divorce can become an almost impossible task. Give the stakes, we cannot counsel strongly enough that no one should sign a prenuptial agreement without taking sufficient time to meet with counsel, financial planners and family members to weigh the consequences of any proposed agreement. Further, you should always remember that you have the ability and the right to negotiate the terms of the agreement, and should do so actively to assert and protect your interests.
A prenuptial agreement is a serious endeavor; you should never take it lightly. Rather, you should taker it as seriously as your future marriage.
If you have questions about a prenuptial agreement, contact us – we can help.