A prenuptial agreement is a contract entered into between two people who intend to get married, in which they agree on a variety of issues regarding their marital relationship. One primary focus of most prenuptial agreements is the delineation of what property each party owns going into the marriage, so that alone would justify the prenuptial agreement being prepared, even if it did nothing more. That agreement will help avoid a variety of problems down the line if the couple later separates and has to divide their property.
However, a prenuptial agreement also allows the parties to agree on other issues that may arise in their relationship. The scope of a prenuptial agreement is as broad as the parties want it to be and as broad as their circumstances require.
Why Do People Get Prenuptial Agreements?
There are many reasons people get prenuptial agreements, but the typical prenuptial agreement is negotiated between two people who have existing estates going into the marriage, and who want to make certain that in the event of a divorce they will be able to hold on to the property with which they came into the marriage. Another common reason is that although one party is willing to marry, he or she is not willing to pay spousal support in the event of a divorce. Often times, that party was required to pay spousal support to an ex-spouse from a previous marriage and he or she is not be willing to marry again unless the new spouse agrees to waive spousal support in the event they later divorced.
Another common situation is where both parties have an existing residence and they want to make arrangements to use one of the residences as their primary residence so they can either rent out or sell the other. The party owning the residence which is going to be used can rightly have issues if the other party is then able to sell his or her residence and simply invest that money as separate property. The need for a prenuptial agreement can also be triggered by retirement funds, where one or both parties come into the marriage with a significant retirement fund that they want to maintain as separate property in the event of a divorce, even with respect to post marriage earnings , half of which would accrue as community property to the benefit of the new spouse in the absence of a prenuptial agreement.
Which Kind Of People Get Prenuptial Agreements?
Often times the people involved are on their second marriage or are in their 40s or 50s, with significant separate property estates although that is not always the case. Young people who get married at an early age typically do not have enough to fight over and do not consider a prenuptial agreement. In my experience, most prenuptial agreements are negotiated between people of means who are older and who are therefore a little more cautious in their approach because they understand that despite each party’s best efforts, divorce can happen.
Does The Prenuptial Agreement Occur Before Or After The Marriage?
A prenuptial agreement is always entered into before marriage, because by definition prenuptial means prior to marriage. The difference between entering into an agreement before marriage and entering into an agreement after marriage is that before marriage neither party is a fiduciary of the other. After marriage, the husband and wife are “fiduciaries” to each other, meaning each has a duty of care and loyalty to the other, and there are more stringent requirements imposed on negotiating financial agreements.
Postnuptial agreements (meaning agreement entered into by people who are already married) can deal with the same issues regarding community versus separate property, use of residences, spousal support and whether earnings during marriage will be community property or separate property. The problem with doing those negotiations after marriage would be that since both parties are fiduciaries, one to the other, the courts would look at those arrangements more strictly and make sure there was fundamental fairness in the negotiations. Generally, this fairness requirement doesn’t arise if the two parties aren’t fiduciaries, as in a prenuptial agreement.
Can Someone Modify The Terms Of The Prenuptial Agreement Years Down The Line?
Yes, the agreement can be modified, but the parties need to realize that if they do that after the marriage, then each will be negotiating as a fiduciary to the other spouse, meaning they would have higher levels of loyalty and care. Fiduciaries are required to take the other party’s best interests into account before his or her own, so they would be negotiating in an entirely different setting and circumstance than the one that existed when a prenuptial agreement is negotiated.
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