When thinking about what should go into a prenuptial agreement, there is so much to consider, from existing assets you may want to protect to those you might seek to protect after you are married.
This blog series offers an advanced primer to get you thinking about crucial elements to consider when developing your prenuptial agreement.
Let’s begin by taking a look at premarital and marital assets and debt:
- Identifying and Protecting Premarital Assets and Debts: If you do not list them as an exhibit to your Prenuptial Agreement, they will most likely not be enforceable. Below are some questions to think about when thinking about premarital assets and debts:
- Make a list of how you will handle premarital assets and debts in the event of a divorce
- Will the assets and debts remain separate property? (Or will they go back to the person who accumulated them before the marriage?)
- Or will your separate property be inter-mingled with your marital property?
- What if one person’s premarital property is used to pay off the other person’s premarital debts (i.e. school loans)?
- Will the paying party need to be reimbursed – or is it a gift?
- What if you use premarital property to buy a home you’ll own together?
- Will the paying party need to be reimbursed – or is it a gift?
- Make a list of how you will handle premarital assets and debts in the event of a divorce
- Marital Property: Marital property describes the assets and debts that you will accumulate together once you are married. During the marriage, you can choose, by agreement to maintain separate financial lives, you can combine them, or you can create a hybrid. Often, people will keep all property owned by title, and they will have to agree for any asset to become marital property.
- Managing Assets and Income: The same concept is in play here. Will you keep assets and income separate or together?
- Who will make the financial decisions?
- Who will handle the checkbook? (Will you do it together, or will one person be the primary financial manager?)
- What about large expenditures?
- Does your spouse need to ask you before buying that plasma TV or designer gown?
- How will the household bills get paid, and whose responsibility is it to pay them?
- Will you have joint bank accounts, separate bank accounts, or both?
- Do you have similar money styles regarding savings, debts?
- Have you discussed your long-term financial goals, and how each of you will contribute?
- What about retirement savings?
- Will the decision-making authority be different for premarital property or debt that belonged to one of you before the marriage?
- If one of you owes spousal support or child support from a previous marriage, how will those payments be made?
- Credit and Debt: Have you seen each other’s credit reports? Now might be a good time to have a serious talk about credit scores and priorities with respect to paying off old debt or accumulating new debt. No surprises, folks!
- Is it likely that either of you might over-borrow? (Or refuse to borrow no matter how much sense it makes to the other person?)
- Consider joint credit issues, as well as issues like pledging your home as collateral on business, or using a home equity line of credit to fund a business or tide it over in an economic downturn.
- Do either of you have bad credit? Will you and your spouse jointly sign on new credit obligations?
- Are back taxes owed? If so, how will they be paid? Jointly, individually, and from which checkbook?
Overwhelmed yet? This is why only few highly experienced divorce attorneys engage in the practice of drafting prenuptial agreements. They are complex documents which require an attorney to listen carefully and to raise all necessary issues, the above being just a few of them. (And that does not even begin to cover the emotional aspects of negotiating a prenuptial agreement, which is a topic for a different day.)
At Milstein Siegel, our attorneys are skilled at helping our clients understand what varying family law agreements can do for them. Give us a call at (410) 792-2300 or fill out the form to receive additional information.
