A Brief Introduction to Premarital Agreements
Premarital (aka prenuptial) agreements are sometimes a touchy subject (and often fodder for celebrity gossip). OK, maybe more than sometimes. I think that’s because they are often viewed as nothing more than pre-planning for divorce. But premarital agreements are often used more for estate planning purposes than anything else. Perhaps viewing a prenup as an estate planning device might cast them in a kinder light.
And they’re not just for rich folks — they’re for anyone concerned about losing control of their property as a result of marriage.
Here are 3 fast facts to know about premarital agreements:
1. What is covered by a premarital agreement?
Premarital agreements really sit squarely at the intersection of marital, property and estate law. A typical premarital agreement covers:
- Property law — Rights and obligations during marriage (property law);
- Marital Law — Division of property and maintenance in the event of dissolution of marriage (marital law);
- Estate Law — Disposition of assets and estate administration upon either spouse’s death (estate law).
Illinois law provides default rights for spouses in each of these scenarios, but a premarital agreement can be used to alter (or eliminate) these rights. For example, probably the most common form of premarital agreement is what one might call a “yours is yours and mine is mine” agreement. Each party brings in and maintains separate property during the marriage, and neither spouse has a claim to the other’s separate property in the event of divorce or death. This would not prevent a spouse from making gifts during life or upon death, but it wouldn’t require it either.
2. What makes a premarital agreement enforceable?
We’ve all heard about divorcing spouses attempting to break a premarital agreement. How does that happen? There are 3 keys to creating a premarital agreement that will have the best chance to stand up to attack when needed:
- Independent Representation — Each spouse-to-be should have his or her own separate attorney, even if the parties readily agree on what the agreement should say. One attorney may take primary responsibility for drafting, but the other party should have separate counsel with an opportunity to review and advise.
- Financial Disclosure — Each spouse-to-be must fully disclose their assets and liabilities as part of the agreement. After all, if you are being asked to give up something, you need to know what it is that you are giving up.
- Unconscienability — The agreement cannot be so one-sided such that it is unconscienable. Facts and circumstances will dictate on a case-by-case basis.
3. Can a premarital agreement by changed?
Yes, it can. A premarital agreement may be amended or revoked in writing at any time by mutual voluntary agreement of both spouses. Additionally, in some situations a marital agreement can be created after marriage (a “post-nuptial” agreement).
If you have a premarital agreement, it is also important to properly incorporate and coordinate the terms into your estate plan. If you have questions about creating a premarital agreement or incorporating one into your estate plan, you should always consult with an attorney. Both estate planners and divorce/family law attorneys tend to work in this practice area, and in many situations, involving attorneys covering both disciplines can provide a good opportunity for collaboration to achieve the desired results.
Image via Wikipedia Commons
About to get married, so this is some crucial information. I haven’t really thought about a prenup, because of the social insinuations until now. I can see a few situations now where it could be beneficial for me in the long term.