YOURS, MINE & OURS - PRENUPTIAL AGREEMENTS

     Given the increase in the divorce rate, it is imperative to protect your assets before you walk down the aisle. After all, no matter how in love you are now, you have to at least entertain the possibility that it could end in divorce. While statistics vary, anywhere from 2/3 to 3/4 of all marriages do not survive. Marriage is the ultimate union of the emotional, the physical and the financial as well. Couples, young and old, fight more about money than anything else, with the possible exception of how to raise the children.

Distress of Dissolution

     There are few things in life tougher than going through the breakup of an intimate, personal relationship. Married or not, the laws in most states are such that when a couple divorces, each partner can be required to share both the assets and the liabilities of the union. When you consider that in every breakup at least one of the parties, if not both, is probably experiencing a tremendous degree of emotional trauma over the split, having to haggle over who gets what is not only distressing but can also become overwhelming. Many couples can ease the frustration ordeal by having a prenuptial (or, later on, postnuptial) agreement in case the relationship fails.

Business vs. Domestic Partnership

     It is common practice for business partners to have a partnership agreement, which includes terms covering the contingency of dissolution of the business. Consider doing the same for your domestic partnership. A prenuptial agreement can identify who owns what assets and debts at the beginning of the relationship and, define how the parties will distribute the assets and debts acquired before and during the relationship, if and when the relationship ends. Addressing these issues in advance, while you and your spouse are still friends, will be easier than it will be at the time of your separation or death.

Limitations

     Prenuptial agreements do have some limitations, however. For instance, terms defining future spousal support or future child custody and support may not be enforceable. Also, they are unromantic and the mere mention of a prenuptial agreement may suggest that the relationship is not expected to last. Nonetheless, if you can work around these obstacles, and the agreement is drafted properly, it could save you or your heirs a lot of money and headache, whether or not you stay together for the rest of your lives.

Should you have a Prenuptial Agreement?

     First, remember that everyone has some property - tangible or intellectual - something of value or worth when they enter into a relationship. However, most people fail to make a list of these items, putting those items into dispute once the relationship ends. At that point, the tug of war becomes costly - emotionally, physically, and financially.

Asset Potential

     Another factor often overlooked is the parties’ "potential" and what it can ultimately generate. Education, talent, and expertise can produce income and should be considered assets. Quite often these intangibles may not produce revenue and goodwill until much later in life, long after the marriage takes place. However, if it is not clearly spelled out in a prenuptial agreement that an individual retains those "rights," any income or goodwill may become joint property.

Postnuptial Agreements

     If you are already married, perhaps a postnuptial agreement would be advisable. Postnuptial agreements may be harder to enforce than prenuptial agreements because the courts follow the logic that married people have a fiduciary duty to each other. A postnuptial agreement, if properly drafted and maintained, will hold up in court. The following suggestions should help get you started:

    As more people in today's society are getting divorced, the importance of a "prenup" is even more apparent. In the event of a failed marriage, prenups can at least save you from financial stress. While some of us still believe a prenup has no place in a romantic relationship, others are learning that there is nothing wrong with considering what a prenup can provide--protection of the assets you had going into marriage as well as protection from your partner's debts should you divorce.

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