In spite of the high rate of divorce seen throughout the country, couples keep getting married, some for the second or third time, some even more times. Divorce, however, is not ignored by the soon-to-be-wed partners, especially those who have been married previously. For people with significant assets, one preventive measure often taken is a Prenuptial Agreement.
There are a number of reasons why prenuptials are considered.
- For some older couples, prenuptials are for estate planning. They are prepared to avoid conflicts with or between adult children. Prenups can also determine how probate issues are resolved. Appropriate planning can result in savings of taxes and legal fees and can provide reassurance that each party will receive the financial support that both parties presently intend. A prenup can also protect the inheritance (if desired) for the children of each party.
- Prenuptial agreements can protect businesses. If there is an existing business run and owned by one of the parties, a prenup can ensure that the owner does not lose control or ownership of the business. The agreement can also provide that an increase in value in a business would be a separate property asset or a community asset. It can also determine how business debts are paid.
- Some people want to avoid repeating an unpleasant divorce experience. Prenuptial agreements can pre-determine various issues from property division to attorney's fees to alimony, among other things. The result is a shorter, less expensive divorce, although one party may feel taken advantage of.
What a court looks at in Texas:
In cases where a party seeks a divorce after having signed a prenuptial agreement, it's not unusual for one party to want to break the agreement. Courts examine a number of factors in determining whether an agreement is valid. If you're thinking about getting or signing a prenuptial agreement, it's helpful to understand what mistakes to avoid.
- It needs to be a voluntary agreement. In many cases, a party doesn't want to sign the agreement, but believes the marriage won't happen unless the prenup is signed. A court will look at all the circumstances to determine if the agreement is voluntary.
- There must be disclosure. If assets are hidden and not disclosed to the other party, a court may set aside the agreement since there is a lack of understanding of the assets and the impact of the agreement.
- The agreement needs to be written and signed.
- Each party should have their own attorney. While it is not essential, it is good practice. A court is probably more likely to set aside an agreement where one party did not have an attorney. (One attorney cannot represent both parties, either.)
- There should be adequate time to discuss the situation, understand the facts and make a voluntary decision. Unfortunately, most people tend to wait until the last minute to start working on an agreement.
If the parties use a Collaborative Law approach to preparing a prenuptial agreement, the stresses of the procedure can be minimized, an enforceable agreement can be reached and both parties will be able to support the agreement because of how the process operates.
Advantages of creating a prenuptial agreement:
While prenups may not seem like a very romantic topic to discuss just before a wedding, there are some solid reasons for doing so and some potential advantages, other than the obvious ones.
- It forces the parties to look into the future and communicate about some important, although not romantic, subjects.
- Done right, the process will reinforce feelings of trust and security while clarifying expectations and values for each party.
- The different communication styles of each party may be demonstrated at a time when there are alternatives available for each person. The good and the bad may come out.
- While attorney's fees for preparation and signing a prenuptial agreement can be substantial, they are a lot less than a contested divorce or probate case would cost. Spending the money up front to prevent a problem can be well worth it.
- If Collaborative Law is used, the parties will learn about each other's goals and learn how to work together and communicate better. It may also lead the parties to be more open-minded and creative with each other. A Collaborative approach takes a little while to do, so it probably won't work if you start three days before the wedding.
For couples getting married, prenuptial agreements can be a valuable tool or they can create hard feelings and put someone at a significant financial or power disadvantage. Agreements can be helpful to both parties, but they cannot be put together properly and effectively in just a few days. Starting work on the process early, and especially using Collaborative Law, can produce a beneficial agreement that will stand up in court and can enhance a relationship.