Pre-Marriage Agreement: 6 Things to Consider
What is a Pre-Marriage Agreement?
When planning a wedding, a couple takes several things into consideration. However, as important as a venue, menu, and guest list are, they pale in comparison to what is needed to plan a marriage. Today, planning a future together also includes planning for a future without each other. A pre-marriage agreement (also known as a prenuptial agreement) creates a safety net in case things do not work out as planned. When creating a prenuptial agreement, a couple should take several things into consideration. The following is a list of things that a couple should always include in their pre-marital agreement.
1. Assets and Debts Accumulated Before Marriage
Both parties should create an extensive list of their valuable assets acquired before the wedding date. On the other hand, a list of personal debts also needs definition. By outlining who has what before assets and debts are combined, it is easier to split them up in the case of divorce. Furthermore, going over financial issues before matrimony helps create a sense of transparency for a couple which helps when joining lives.
When drafting your pre-marriage agreement, clarify whether or not each party expects to retain their assets and debts in case of divorce. While it may seem like a given, there are instances where it may not be the case. For example, if one party owns a house before marriage but plans to leave it to the other in the event of divorce to ensure their security.
As far as debts go, if one party helps the other pay something off, they may ask for reimbursement in case of divorce. Clarifying whether or not this is acceptable in the prenuptial agreement helps prevent needless fighting and disputes through the separation process.
2. Assets Purchased Together
Your pre-marital agreement needs to define how the two of you will handle assets accumulated together. Typically, a married couple owns these things equally, 50/50. However, some people find another arrangement works best for them. If one party uses premarital property or assets to make a joint purchase, then they should determine whether or not they expect reimbursement in case of separation. Typically, anything purchased together is seen as common property no matter where the source of funds. If you do not specify that you expect reimbursement, the courts will deem it a gift.
3. Income Management
In addition to asset ownership, it helps to determine how a couple manages income. Creating a clear plan may save a marriage. Instead of fighting over whether or not to spend or save, an outline of a retirement plan vs. annual spending defines expectations ahead of time. Furthermore, creating clear-cut expectations of who will manage money helps in divorces caused by money issues. If a spouse expects the other to carry a certain amount of weight financially and they fail to do so, a pre-marriage agreement defining these expectations supports the defending party in divorce court. Questions relevant to income management one should ask include:
- Should one party consult the other before making large purchases?
- Will both parties handle financial management evenly?
- Who is in charge of household bills and expenditures?
- Is it acceptable to open a separate bank account?
- Can either party dip into savings for any reason?
A lawyer can help further define expectations regarding income management for a pre-marriage agreement.
4. Homemaking and Working
A dollar amount cannot measure every contribution to a marriage. One does not earn a salary for managing a household or raising children, but that does not denote their value. A pre-marriage agreement is a perfect place to define how a couple views these contributions as well as its worth in case of divorce. A homemaker sees equal shares of properties and assets no matter how much the other party makes. A prenuptial agreement can mitigate more– or less– funds to a homemaker depending on the couple’s preferences.
Furthermore, a pre-marriage agreement can define how to place value on a change of career. For instance, a couple where each party makes about equal amounts of money can easily divide assets at first. However, if one party switches to a lower paying job, does that mean they should receive less in separation proceedings? These are questions to ask and define when drafting a pre-marriage agreement.
5. Spousal Support and Alimony
Probably one of the most well-known purposes of a prenuptial agreement is the definition of spousal support in case of divorce. A pre-marriage agreement provides the space to clearly outline how much alimony a party expects to give and receive. A couple can provide provisions on how much is due based on the conditions of separation. Without clarifying expectations in a prenuptial agreement, terms of alimony and spousal support are subject to state law and the judge overseeing a divorce hearing.
When making decisions during a divorce hearing, a judge typically takes fault into consideration. A pre-marriage agreement defines how the couple wishes to utilize fault in the case of divorce. Fault includes– but is not exclusive to– the ending of marriage due to extramarital sexual relations, drug or alcohol addiction, or physical abuse.
When drafting a pre-marriage agreement, a couple incorporates fault into its provisions. For instance, a party may receive more alimony if said party is not at fault for the divorce. Adversely, a couple may also decide to not grant any importance to fault in a preemptive attempt to separate amicably.
Help With A Pre-Marriage Agreement
The above only scratches the surface of what one needs to consider when drafting a pre-marriage agreement. To create a comprehensive plan that protects both parties a couple needs to hire a dedicated lawyer with experience in prenuptial legal matters. If you are in the Newport, Rhode Island area and seek counsel regarding a pre-marriage agreement, contact The Law Offices of Howe & Garside by calling 401-722-6335.