Most people have heard of prenuptial agreements but usually in the context of a spouse of a well-known and wealthy individual contesting the agreement in his or her own marriage. Prenups are essentially contracts between couples as to how their property and assets are to be divided in the event of a divorce.
But prenups are not just for wealthy couples who wish to limit what or how much of their property is to be divided upon divorce. Any couple about to marry should consider one in order to avoid the possibility of a prolonged and costly divorce proceeding since financial matters are often a contentious issue. Here are some reasons why you should have a prenuptial agreement:
- It can limit your debt liability. When couples divorce, the court will examine the property acquired during the marriage, or marital property, and decide on an equitable means of dividing it since Massachusetts is an equitable property division state. The court will also look at the debts accumulated during the marriage. By identifying which particular debts will be assumed by whom, it will eliminate uncertainty and disputes when the marriage dissolves.
- It avoids disputes over money. After child custody, financial matters are the source of much acrimony and resentment in a divorce. By discussing the division of assets ahead of time, you avoid the conversation at a time when emotions are running high and reasonableness is not always the rule of the day. Before marrying, both parties should have a reasonable period of time to discuss their individual finances and which assets will be joint and which will remain separate. If a business is involved, you may want to discuss how the business interest is to be divided if the marriage fails. Alimony or spousal support should be discussed as well as any other financial concerns.
- You can avoid standard divorce laws. If done correctly, your prenup can avoid standard divorce laws that govern most divorces. However, you cannot limit child support payments or even determine child custody issues in a prenup. If you do so, a judge will still review your agreement to see if it is in the best interests of the children by using certain standard factors.
- Determine what is marital and premarital property. Sometimes the distinction between property or assets obtained or accumulated during a marriage and that obtained before marriage is not so clear. This can be an issue where a business that existed before the marriage is involved and the non-business owning spouse asserts that he or she has an interest in it.
- Retirement benefits. In many divorces, a spouse can share in the other’s pension or other retirement benefits when the court is deciding on an equitable division of property. Your prenup can state that you each retain all of your retirement benefits. This can also apply to any joint accounts and how they are to be divided.
- Provide for health insurance or life insurance for a spouse if there is a divorce, or that the other spouse will pay for the other’s education costs.
- Children from another marriage can be considered. A prenup can provide that children of a previous marriage or relationship will still inherit certain assets in case a spouse dies intestate or without a will.
A carefully drafted prenuptial agreement makes sense and can be a valuable financial planning tool for you to use during your marriage.
Validity of Boston Prenups
There is always the possibility that a spouse will contest the validity of a prenuptial agreement once a divorce proceeding is filed. The validity of the agreement rests on certain factors. For instance, the agreement must have been reasonable at the time it was drafted and executed as well as at the time of the divorce. If the court decides otherwise at either time, then it will be deemed unenforceable.
Other factors include:
- Did the parties fully disclose all of their assets and debts at the time it was executed? If a spouse failed to disclose assets such as those hidden in a foreign bank account, or neglected to mention the existence of stocks or bonds, or that he has real estate in a different state or country, it could invalidate the agreement.
- Any provision regarding non-financial arrangements will not be enforced. For instance, if you decided on who does certain chores, about where the children are to spend holidays, which religion the children will be brought up in, or any other similar non-financial arrangement, then you risk having those provisions invalidated.
- Were both parties represented by separate counsel at the time of execution? It is essential that you have separate and independent counsel review your agreement for reasonableness and that you validly waived your rights. Have a Boston divorce lawyer negotiate and draft the agreement for you or at least carefully review one that has already been prepared.
- Was the agreement signed under duress or coercion? A court will be suspicious if the parties rushed into the agreement just days or even a couple of weeks before the marriage. If one party alleges that the other made certain threats to induce the other to sign the agreement, it could lead to costly litigation and probable invalidation of the entire agreement.
- The agreement is now unconscionable at the time of the divorce. This is referred to as the “second look” doctrine. Circumstances change over time and if the parties could not have reasonably foreseen the change, then the agreement can be tossed out. For example, if a spouse has lost her job, was injured or became gravely ill, or is otherwise presently unable to support him or herself due to unforeseen circumstances, then provisions limiting alimony or how certain property will be distributed will probably not be upheld. A real life example was where an agreement left some real property to a spouse but nothing else. At the time the agreement was executed, the property had considerable value. But years later when the parties were divorcing, the asset was steeped in debt and the receiving spouse faced bankruptcy. In this case, the court invalidated the prenup since the other spouse was financially secure and it would have been unconscionable to have enforced it against the other party.
Retain the Law Firm of Lovenberg & Associates
Prenuptial agreements, if done properly, can be a valuable tool for you and can limit costs and unnecessary disputes in the event your marriage does not last. Call our office at (617) 973-9950 and ask for one of our Boston divorce lawyers to discuss a prenuptial agreement or any other divorce issues.
