Many of us think we are familiar with what a prenuptial agreement is and what it does. But there are many misconceptions out there about prenuptial agreements. Here are some things that you may not know—and that you really should know—when it comes to prenuptial agreements.
You are Not Getting Divorced
Some people feel that if their soon-to-be spouse asks for a prenuptial, it must mean that they anticipate the marriage falling apart in the future. This is simply not true.
Think of a prenuptial agreement as security or insurance. It is peace of mind, not to mention an assurance that fighting will be minimal should a divorce happen. You may also find that the things you want to protect in a prenuptial agreement are not major concerns for your spouse after all. For example, if you want to make sure your share of your mom’s family business never goes to your husband in a divorce, you may find that he is perfectly OK with that.
Disclosing Everything
If you do want a prenuptial agreement, you will have to make a full disclosure of your assets. Many people skip this step, assuming that their soon-to-be spouse “knows all about my finances anyway.” But that is not good enough. A full disclosure, on paper, with supporting documents is necessary.
Disclosing all assets means all assets. That includes cryptocurrency, interests in businesses, dividends from stocks, or perks from work. It can also include contingent assets that have not been received yet, such as anticipated bonuses from work or inheritances from ill relatives you anticipate receiving.
Remember that one big way that people try to get out of prenuptial agreements after they are signed is by saying that money, property, or assets were concealed from them when the prenuptial was signed. Do not risk having a problem later on. Your marital and family attorney can help you draft the forms and affidavits and help you compile the documents that you need to make full disclosure to your soon-to-be spouse.
No Stress or Coercion
One other way that people who sign prenuptial agreements try to get out of them later is by saying that they were pressured or coerced. One way this happens is by forcing a spouse to sign a prenuptial agreement too close to the marriage date.
Both spouses should have enough time to read, consider and negotiate a prenuptial agreement. Drafting an agreement five days before your wedding day will open the door to a spouse one day saying, “I signed it because it was so close to the marriage that I couldn’t say no.”
Do not ever discourage your spouse from getting legal representation. Saying things like, “Why do you need an attorney to review the prenuptial; why don’t you trust me?” is classic coercion—never do anything to discourage the other side from having a proposed prenuptial from being reviewed by an attorney. That includes giving someone a proposed prenuptial so close to the marriage date that there is no time to have an attorney review and negotiate it.
It should go without saying–never threaten your spouse, in any way, as a way to entice him or her to sign an agreement.
Do Not Forget Debts
Everybody wants to agree on who gets what in a prenuptial agreement. But what about debts?
Often a spouse will marry another spouse who is in debt or who anticipates borrowing money during the marriage, and the non-borrowing spouse wants to make sure that they are never liable for that debt. Any debt that you may acquire, either jointly in both your names or individually, should be referenced in your prenuptial agreement.
Do not forget about how any debts will be divided, keeping in mind that in some cases, you may have joint accounts, and you may be unable to remove a spouse’s name from that debt, even after your divorce.
Children, Custody, and Support
As a general rule, you cannot agree on issues regarding the kids in prenuptial agreements. In other words, you could not agree on who will get custody or who will have visitation. That is not to say that you cannot agree to those things later as part of a negotiated settlement of your divorce. It just means that you could not say that mom will have the kids 60% of the time in a prenuptial, and years later, upon a divorce, assume that this provision will be legally binding.
The same goes for child support. Child support will be determined by the courts at the time of the divorce. An agreement before the marriage to pay a certain dollar figure will usually not be legally enforceable.
Death Before Divorce
Your prenuptial agreement may or may not apply if a spouse dies. Do not assume that the death of a spouse (during the marriage) will automatically trigger the division of property that you contemplated in your prenuptial agreement.
If your prenuptial agreement conflicts with either your or your spouse’s estate planning documents (like a will or trust), there is a good chance that the prenuptial agreement will govern. Of course, that issue will ultimately be decided by the probate judge, but it is a good reason to have your prenup expertly crafted by an experienced attorney.
Sentimental Value
Do not forget the items that have value to you but do not have actual significant financial value. You may have collections, family heirlooms, or items of sentimental value, like items that your kids make for you, all of which you can include in your prenuptial agreement.
That includes pets, which are treated like property by New Jersey courts. But you can, in a prenup, agree in advance that your dog will remain your dog, even should the marriage not work out.
It is never too early to start planning for the future. A prenuptial agreement is there to keep both you and your soon-to-be spouse safe. Ask us about how we can help. Contact us for help in planning for your divorce.