You hear your friends joke about it. You may take a ribbing at your bachelor/bachelorette party. Your parents may even ask about it in secret. It seems to be on everyone’s mind. The unspoken words that are on most engaged couples minds: “Prenuptial Agreement”. *GASP*

Often called a “pre-nup”, most people have a preconceived notion of what a prenuptial agreement is. It has the reputation of being a marriage killer. Many questions arise such as “Don’t they trust each other”? Or statements like, “Well that marriage won’t last—they got a pre-nup”. This is an entirely outdated way of thinking. There are many purposes of a prenuptial contract that this article will discuss.

Definitive Statistics?

We have all heard the statistic that 50% of marriages end in divorce. Are these statistics true? Where are these stats coming from? Is marriage not taken serious in this day and age? The bottom line is….it depends on many factors–sources of information, the regional area you reside in, economic situations, and many other circumstances. You can find an enormous amount of different statistics on any of these questions, but a better question would be “How many of these couples have a prenuptial agreement in place”? Or “How many of these couples planned for asset security with a prenuptial agreement”?

Purposes and Protections

There are many advantages for entering into a prenuptial contract before a marriage ceremony. The first reason is for the simple basis that couples do not want the law to dictate who gets what if the marriage dissolves. People want to feel in control of their personal assets as well as the splitting of their finances. A properly executed prenuptial agreement can safeguard assets, provide security to loved ones, keep a business in the family, or simplify divorce proceedings. Nowadays it is considered smart planning to have a sound pre-marriage agreement in place. This document should be as important as your Will, Power of Attorney, or any other legal document.

Second, a prenuptial agreement usually makes sense if a person remarries. Legal and monetary concerns are often very different than in one’s first marriage. You may have children from a previous marriage, support obligations, and own a home or other significant assets. In the event that something happens to you a signed pre-marriage agreement can make sure all assets are divided according to your requests.

Third, it can avoid Michigan’s Inheritance laws. Michigan law provides a spouse certain rights that can override the terms of a will. For example, the surviving spouse has an absolute right to elect against a will that does not provide for him or her and receive instead approximately one-fourth of the deceased spouse’s estate. These laws can get tricky, but an experienced Family Law attorney can help guide you through.

Fourth, if the person you are about to marry has substantial debt; it can protect you from the new spouse’s previous debt if the marriage falls apart. Many times a court does not determine which party owes what obligations when divorce proceedings occur. A proper prenuptial agreement can resolve these issues before they begin.

Finally, the most important reason for a prenuptial agreement may be to avoid alienating your children with a messy divorce. Many times parents, intentionally or not, end up using their children as leverage against each other. A sound agreement can help eliminate the factors involved with legal custody issues concerning children. Other grounds for a pre-nup include protecting earning potential or current earnings, ownership of a business, and saving legal costs. Plachta, Murphy & Associates always recommends counseling as an alternative to divorce. We do recognize, however, that some marriages ultimately dissolve and having a prenuptial agreement can help alleviate the stress that comes with this particular life transition.

Pre-nups are for Millionaires!

Wrong! Prenuptial agreements are for EVERYDAY people. They may be important to integrate into your estate plan. Family treasures or heirlooms that are near and dear to someone’s heart should stay in the correct family. Increasingly, middle class couples looking to start their life planning for their future have a reliable agreement in place as one of their important legal documents.

Caution Ahead?

The question on most people’s mind is “How do I approach my partner without coming off as someone who doesn’t think our marriage will last”? These are very cautious waters to navigate. Chances are your partner is thinking the very same thing. It is smart planning to have safeguards in place. Start talking about putting a prenuptial agreement in place as soon as wedding plans start to form. Being open and honest up front makes this touchy subject entirely manageable to not only approach, but get the ball rolling as well. Moreover, Plachta, Murphy & Associates can provide you with a checklist you may want to use as a discussion starter.

According to Family Law attorney Miles J. Murphy,

“Every effort should be made beforehand to prepare for a long lasting marriage, and that includes establishing mutually satisfactory rights regarding assets and debts to avoid future problems”.

Miles J. Murphy III, with the law firm of Plachta, Murphy & Associates, P.C. located in Grand Rapids, Michigan has more than 20 years of Family Law experience. He represents individuals and families in court throughout West Michigan. He is also a former member of the Kent County Family and Children’s Coordinating Council. Please feel free to visit us at www.pmalawpc.com, contact Miles directly at mmurphy@pmalawpc.com, or call 616-458-3994.

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Deciding whether or not to hire your own attorney for prenup negotiations will depend upon the prenup itself and your comfort level with the issues it covers. If your partner has hired an attorney to draft the prenup, you may want to retain your own counsel to ensure your interests are protected. This is especially true when the prenup addresses complex legal and financial situations that you may not fully understand.

Typically, the attorney(s) are paid by the spouse requesting the prenup which is usually the wealthier of the two parties. But even if your attorney receives his or her check from your fiance’, he or she is ethically obligated to represent your interests in the prenup proceedings.

On the flip side, if the prenup is relatively straightforward, addresses fairly simple issues and you are comfortable that all of you and your future spouse’s assets are disclosed and covered in the agreement, you may feel comfortable handling things yourself.

As an alternative to hiring attorneys, you and your partner may want to consider using a do-it-yourself prenup form and save your money for that honeymoon in the Bahamas.

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1. You make a lot of money. People with a high net worth should consider a prenup simply because it will protect their assets and financial status in the event that the marriagedoesn’t last. A prenup can stipulate how property such as stocks, bank accounts and even interests in business ventures will bedistributed. Plus, you can also address the issue of spousal support, with some stipulations. Learn more by reading “Criteria For Valid Prenups” .
2. Your future spouse makes a lot of money.Because states have different laws for determining what is marital property and what is considered to be separate among the parties, there’s no way to guarantee that you’ll receive adequate compensation in the event that the marriage fails. Most courts do consider alimony for the lesser-earning spouse when the other makes considerably more, however, this is not guaranteed. A prenup could help you establish an adequate support plan to help you live on your own after adivorce.
3. You own a business. While you may have started the business prior to your marriage, any income received after the wedding would likely be considered community property and its also reasonable to assume that your spouse may contribute to the business and its success over the years. A prenup would help ensure that you keep controlling interest in your business in the event that the marriage doesn’t last.
4. You have children from a former marriage. These days, blended families are quite common and it’s not unusual for one or both spouses to enter a second or third marriage with a substantial amount of “inheritables” as well as heirs to inherit them. If this sounds like you, a prenup could stipulate who gets what when you die, meaning those precious family heirlooms and financial assets would go to your kids in the event of death or divorce.
5. You plan to put your future spouse through college (or vice versa). It’s not uncommon for couples to agree to put each other through college or a trade school during the early years of their marriage. But what happens when you’ve held up your end of the bargain and then the marriage fails before you get your chance to finish school? A prenup can help ensure that your ex follows through and either pays for your schooling or reimburses you for your contribution to their education.
6. You have a professional license or degree. In many states, this type of professional designation is considered to be an income-producing asset. That means your ex could receive a percentage of the future income this designation produces. A prenup gives you the opportunity to exclude your licenses and degrees (as well as their monetary value) from the property distribution process.
7. You have separate property that will be commingled with community property. One of the first things many couples do after marrying is purchase their first home. While the house itself will be considered marital property, the initial down payment for the house often comes from one of the spouses, out of an inheritance or “separate” savings account, for example. By committing this separate property to a community purchase, you are effectively “commingling” your funds and should you divorce later, your separate interest may not be protected. A prenup allows you to stipulate this separate property so that you are reimbursed during the property distribution process during a divorce proceeding.
8. Your future spouse has a substantial amount of debt. If your future spouse brings a load of debt to the marriage, a prenup could possibly protect you from assuming some of that debt down the road. Typically, you’re not legally responsible for debt assumed by your spouse prior to the marriage however, if the marriage lasts for a great length of time, it may be difficult to prove that the debt was separate and not shared. You can list these debts in a prenup and even include balances so that your obligations would be limited.
9. You have a substantial retirement fund, profit-sharing plan or IRA. Retirement plansand the like are sometimes considered to be a future income in the property division process. That means that your hefty 401(k) could become part of the marital assets during a divorce. To keep these types of investments separate, you need to document your interests in a prenup.
10. It doesn’t cost as much as you think. While attorneys can charge some pretty high hourly rates to draft your prenup, there are plenty of do-it-yourself forms that allow you to craft your own document. Just be sure you’ve considered all of your financial concerns when creating your prenup and if you aren’t sure about something, get the answers before you sign.

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Theoretically, asking for a prenuptial agreement shouldn’t be a big deal. After all, according to the statistics, there’s a decent chance that this marriage may not last. People change, relationships can end and no one can really blame you if you want to protect your assets.

But in reality, asking for a prenup can ignite a range of responses and emotions, including anger and feelings of betrayal. All of which makes your prenup negotiations a delicate process indeed.

And while there’s no real way to predict how your fiance’ will react, you can, in fact, minimize the damage.

Know What You Want

The biggest mistake in asking for a prenup is to go into the conversation without a clear vision of what it is you’re asking for. In general, a prenup is designed to protect both parties in the event that the marriage doesn’t last. However, to simply tell your soon-to-be spouse that you want to keep all your “stuff” probably isn’t going to have a good effect on your relationship. Instead, you need to decide what specific items you want to protect and, more importantly, why.

For example, if you have a collection of heirlooms that were handed down from your great-great grandparents, it’s reasonable to assume that you don’t want these items to become community property. In theory, these items would most likely be consideredseparate property anyway. Just to be sure though, a prenup would allow you to stipulate the heirlooms and keep them from falling into the marital property bowl. (Be sure to understand how separate property can become community property after your marriage.)

Likewise, if you have built a business from the ground up prior to your marriage, you probably have a substantial interest in seeing that business continue, even if the marriage doesn’t work out. You want to make sure that potential divorce litigation does not disrupt your business or put you in the position of selling your business to settle a divorce case. Asking your fiance’ to allow you to keep your heirlooms and controlling interest in your business is much different than simply asking him or her to “walk away with nothing”.

There are a number of do-it-yourself prenuptial forms that can assist in drafting the agreement.

Be Reasonable

Assuming that the marriage lasts any real length of time, it is also reasonable to assume that your future spouse will contribute to your future successes, including that formidable business empire we mentioned above. Offering a prenup that leaves your fiance with “nothing” in the event of divorce is not only unreasonable, its also likely to be thrown out of court. Instead, find a middle ground. For example, while you might keep controlling interest, your spouse could have a percentage of the stock or you could agree to pay a lump sum depending upon the success of the business and/or the number of years the marriage lasts. Obviously, this kind of structured settlement can get fairly complex, depending upon the assets in question so be sure you understand all the ramifications of your prenup before asking your spouse to sign.

Protect Your Spouse

You may not be the only one interested in “protecting their own” so if at all possible, come prepared with stipulations that your future spouse might like to include. This helps to remove the impression of selfishness that prenups so often imply and replaces it with a sense of fairness. If you have pre-marital investments and your fiance has pre-marital real estate, for example, the agreement can protect both of you with regard to those assets. Your fiance’ may or may not choose to include your suggestions and he or she may have some of their own that you haven’t thought of. But at the very least, you likely minimize any possible defensiveness and perhaps even replace some of the emotional “trust” issues with more manageable financial discussions.

Keep It “Business”, But Don’t Ignore the Relationship

The problem with prenups is that many people see them as evidence of distrust in the relationship. After all, this is “true love”, so why would you need a legal document to suggest otherwise? When approaching your fiance about a prenup, you’ll want to present it as a business decision that the two of you should make together in order to protect your financial interests. The tone and feel of this conversation should be similar to discussing your options about buying a house or deciding which stocks to include in your IRA. Also remember that the prenup can do more than just dictate who gets the Mercedes and who will get spousal support. It can also address a whole slew of other financial decisions such as an agreement to put each other through college, medical school or some other similar venture. By including these more “personal” items, it makes it easier to address your goals, both as individuals as well as a couple. And by showing your fiance that you’re interested not only in your own well-being should the marriage fall apart but in his or her individual goals as well, you’ll have an easier time keeping the conversation at a professional, non-emotional level. Learn more by reading “What A Prenup Can And Can’t Do“. That said, emotions are bound to enter the picture sooner or later, so don’t be surprised and certainly don’t dismiss them as irrelevant. Many people are hurt by the request to sign a prenup, so it’s your job to alleviate those anxieties and give your future spouse an active role in the construction of this all important document. And finally, try to plan your prenup conversation. Pick a time that’s good for both of you – not when he or she is trying to prepare for a big meeting – and do it privately, not in the presence of a large group. Show respect for his or her time and feelings.

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The best way to create a valid prenuptial agreement is to follow the laws of your state. These laws will vary – some allow stipulations that other states won’t – so it’s crucial that you have a good understanding of what a prenup can and can’t do .

In general, a prenuptial agreement must be in writing and signed by both parties to be considered valid. Neither party can be under any sort of duress when making the agreement, and it must essentially be fair. Even the timing of the prenup can affect whether it is ruled to be valid or not. If there is any suggestion that the wealthier spouse waited to “spring” the prenup on the unsuspecting spouse, the prenup may be ruled to be invalid and normal property distribution laws would apply.

Some states allow prenups to stipulate the amount of alimony if any, that will be paid, while other states do not. If you are addressing alimony in your prenup, you should remember that the courts will consider whether or not such a settlement is reasonable. If it does not pass the test, the judge may decide to set this portion of the prenup aside and award alimony as he or she sees fit.

A prenup must be executed prior to thewedding and must include complete disclosure about each party’s financial situation. Future expectations must also be addressed, such as when once spouse expects to receive a substantial amount of money subject to an anticipated event. Failure to provide such disclosure will likely cause your prenup to be ruled as invalid.

Many states also require that both parties be represented by independent counsel (a lawyer) to ensure they understand the terms of a prenup and that their rights are being protected. Prenups are also limited to certain financial and property issues, so including items that aren’t allowed is a sure way to have your prenup dismissed.

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Although many see a prenuptial agreement as a “fix-all” kind of document, the truth is there are some things it just can’t do. A prenup is designed to address the financial aspects of your relationship. This includes property division, assets, expenditures and debts. What a prenup cannot do however, is outline all the personal, day-to-day decisions that all married couples must make.

What can a prenup do?

• Separate your property so that yours is yours and theirs is theirs in the event of a divorce .
• Document financial agreements such as putting each other through college or purchasing a house with a trust fund or inheritance.
• Fund future expenditures such as college for your children or starting up a new business.
• Stipulate basic financial responsibilities such as filing your taxes and paying bills.
• Provide future support such as life insurance policies or health insurance for you and your children.
• Separate your debt so that you are not responsible for specific debts incurred prior to marriage.

What can’t a prenup do?

• Divide up household chores, such as laundry, dishes and grocery shopping.
• Dictate relationships with your friends, in-laws or co-workers.
• Place restrictions on having children or dictate the number you will have.
• Create benefits that would encourage or entice one party or the other to divorce.
• In addition to these guidelines, a prenup hasno effect on child support or visitation rights. Some states also don’t allow alimony waivers so check your state’s laws before you begin to draft your agreement.

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A prenup (also known as a prenuptial or premarital agreement) allows married couples to outline the financial aspects of their lives. And while there are some clear distinctions betweenwhat a prenup can and can’t do, this type of contract can generally afford protection that the parties might not get otherwise in a court of law.

The Pros

There are several benefits to having a prenup. Couples can stipulate how property is distributed in the event of a divorce, superseding the normal community propertylaws of their state.

A prenup can outline certain responsibilities and/or agreements between the parties such as paying a spouse’s way through college or paying off individual debts. Prenups also allow couples to decide now about future financial matters and identify any heirlooms or other issues that might come up later during a distribution of your estate. Read more aboutwhat a prenup can and can’t do.

The Cons

All the benefits aside, prenups are not right for everyone. Many soon-to-be spouses shy away from a prenup because they see it as a sign of distrust. In addition, if your prenup is found to be grossly unfair or biased, the court may set it aside and invoke standard community property laws anyway. Laws regarding prenups also vary from state to state, so you may find that what you want to stipulate isn’t allowable by law.

Also, most people don’t realize that prenups are not always air tight, and can be challenged in court. Read more about criteria for valid prenups.

How can you decide if a prenup is right for you?

Look at your individual situation. Prenups are generally designed to address financial and property matters. Do you have certain assets you want to protect in the event of a divorce? Do you own property or maintain a large savings that you’d like to keep separate from your marriage? Do you have kids from a previous marriage or own part or all of a business? Do you have plans to leave portions of your estate to someone other than your soon-to-be-spouse?

If you answer yes to any of these questions, you might find a prenup to be a useful tool. But the most important factor to consider is whether you and your spouse will be comfortable with such a contract. Many couples view prenups as a wedge between them and have difficulty overcoming the emotional ramifications of the document. When deciding whether or not you need a prenup, be sure to consider all the possible outcomes.

Does having a prenup make divorce easier and less expensive?

Most pre-marital agreements govern the terms of the divorce, which enable the parties to end their marriage more quickly and without the need for court intervention. However, pre-marital agreements do not always result in a faster or less expensive divorce. Prenuptial agreements can be challenged, so there can even be litigation surrounding the validity of the prenup itself…resulting in what could even be a longer, more expensive divorce process.

For those with significant assets to protect a prenuptial agreeement stil may be a good idea. Even though prenups are sometimes challenged during a divorce, a well-drafted one can, in some scenarios, be worth the time and expense. Read more about criteria for valid prenups.

If you decide to look further into entering into a prenuptial agreement and your situation is pretty simple in terms of assets, you may want to consider looking at state-specific prenuptial forms

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A postmarital agreement (or “postnuptial”) is simply a prenuptial agreement that’s executed after the wedding has taken place.

While there’s not extensive case law to govern this type of agreement, the courts tend to rely on the same rules and guidelines that apply to a premarital agreement. Alimony may or may not be able to be addressed (depending upon your state) and other issues such as life insurance and property division can be included.

Like its prenuptial counterpart, a postmarital agreement must also be fair and both parties must have disclosed information regarding assets, liabilities and other financial aspects .

It should also be noted that many courts question the reasoning behind such an agreement when it is drafted after themarriage has taken place. This scrutiny suggests that couples should take extra care to outline the reasons for the postmarital agreement and that all issues are properly addressed. The most commonly accepted reasons include extreme changes in your financial situation and new life plans such as an agreement to put each other through college. As with prenups, a postmarital agreement cannot make any stipulations regarding child support .

A postmarital agreement must be executed by both parties voluntarily and will not be valid if one of the parties is under duress or coerced in any way.

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When drafting a prenuptial agreement , the issue of spousal support (or alimony) is one of the most likely, and often most sensitive topics to come up.

Spousal support is a monetary amount designed to allow the lower-income spouse to continue meeting certain living expenses and/or continue maintaining a specific lifestyle. Once thought to be exclusively for the rich, spousal support is becoming more and more prevalent across the country.

How Much is Enough?

In general, there is no set amount required by law. In fact, your prenuptial agreement doesn’t have to include alimony at all. It should however, address the issue one way or the other, meaning that if you’re not going to pay spousal support, your prenup should state this fact and include a signed waiver from your spouse.

It should be noted that some states don’t recognize this kind of waiver at all and those that do will scrutinize it closely.

Courts want to be sure that both parties can continue to meet their reasonable living expenses and if one spouse receives a considerably larger income than the other, the court may set aside the waiver and grantalimony anyway.

The key to alimony is a two-part test: the first is the self-sufficiency question. Can both parties continue to be self-sufficient without any support from the other? If the answer is yes, the court may very well allow a waiver to stand. If the answer is no however, alimony may be awarded to balance out the difference.

The second part of the test is a standard known as “unconscionability”. This basically means an agreement that is obviously unfair or detrimental to one of the parties. In this test, the courts look to see if the agreement is one that a sensible or prudent person would normally sign without any stress, coercion or misrepresentation of facts. If not, the agreement will be set aside and the courts will award spousal support in a more appropriate amount.

Drafting Your Agreement

Prenuptial agreements can specifically address a number of variables such as a drastic increase or decrease in income and/or expenses, so it makes sense to be as detailed as possible when drafting your prenup. You can include provisions that ensure the amount of spousal support never exceeds a certain percentage of your income for example or the recipient spouse could ask that a future increase in income be addressed separately in the agreement.

You can also outline different amounts based on different factors such as the number of years the marriage lasts or a significant financial change that may or may not occur in the future. This is often called an escalator clause and is commonly used to allow the prenuptial agreement to adjust with unforeseen changes and events.

Alimony can continue for an unlimited amount of time or a fixed period. It can vary in amounts or stay the same for the duration it is paid. You can also make alimony subject to certain conditions, such as the recipient spouse remarrying or achieving a certain income on their own. In any event, alimony ends when the recipient spouse dies.

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Prenuptial agreements are becoming more and more prevalent in today’s society as couples try to take an active role in planning possible future events.

And while prenuptial agreements can be very flexible and address a variety of circumstances, there are a few deal-breakers that can cause your prenup to be set aside by the courts.

The Uniform Premarital Agreement Act is a federal document that basically sets out what parties can and can’t do in a prenup. About half of the states in the U.S. have adopted this act and of those, some states have also added additional criteria that must be met before a premarital agreement will be enforced.

The Act defines what issues may be addressed in a prenup, including life insurance policies,property division, wills and spousal support . Some states have modified the agreement to disallow the spousal support provision, so that such support cannot be waived and will be decided as a separate issue by the court.

Under this Act, a premarital agreement is not enforceable if one of the parties did not agree to the contract voluntarily or if the agreement was done without full knowledge of the other party’s estate and assets. A premarital agreement can also be declared invalid if the agreement itself is so unfair that a normally reasonable person would have never agreed to such a deal.

This Act also allows the parties to agree on which state will govern their premarital agreement and if such a provision is made, the parties will be subject to the case laws and statutes currently in effect at the time the marriage is dissolved.

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