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Lately, I have been getting a lot of requests from clients for prenuptial agreements. As people marry later and accumulate assets prior to marriage, they are looking to protect those assets. A prenuptial agreement can alleviate some pre-wedding anxiety for people wondering, 'what if this doesn't work out?' Certainly, people who have been divorced once and have children are often looking to protect their children from the potential negative financial affect of a second divorce. Although marrying for the second time is often seen as the triumph of hope over experience, a prenuptial agreement can be a way to try to bridge both perspectives.
Even though most people understand the idea of a prenuptial agreement, most people do not understand exactly how they work, what they can accomplish and how powerful they can be. Depending on how they are drafted and what they hope to accomplish, prenuptial agreements can do a number of things.
With regard to the financial issues surrounding a divorce -- such as divisions of assets and spousal support -- prenuptial agreements are typically enforced. Most State divorce laws generally will enforce a well-executed prenuptial agreement that:
• Is in writing;
• Is executed voluntarily;
• Follows a full and/or fair disclosure at the time of execution;
• Is not unconscionable;
• Is executed by both parties personally "in the manner required for a deed to be recorded", known as an acknowledgment, before a notary public.
Prenuptial agreements are generally not enforceable with regard to child custody or parenting plans (sometimes called access or visitation plans) because courts retain a parens patriae (Latin for parent of the nation) interest and power over how children are cared for and raised.
Not all States favor prenuptial agreements and they can have greater or lesser enforceability depending on where the couple lives and what has happened in the marriage since the signing. In Maine, for example, prenuptial agreements automatically lapse when children are born and must be renewed.
Prenuptial agreements usually do one or more of the following three things:
1. Determine the division of property between spouses at separation and/or divorce;
2. Determine and limit the possibility of spousal support (alimony) payments in the event of separation and/or divorce;
3. Influence the allocation of assets when one spouse dies.
The truth is prenuptial agreements are not romantic. Planning a wedding can be joyful and fun and also often stressful. Adding the negotiation of the terms of a prenup into the planning time can be and often is upsetting for both parties. Extended families are often involved and often have strong feelings about the prenup. This is often not the best way to get to know your future in-laws.
It takes time and effort to prepare, negotiate, draft and execute a pre-nuptial agreement. The process may not be romantic but it can be strengthen a relationship and help a couple think through their individual and collective visions for their future family and each persons role in it.