By Allison Quattrocchi, J.D.
If you ask your fiancé about a pre-marital agreement or a spouse about signing a post-marital agreement, she or he might feel deeply hurt, disappointed, threatened, and perhaps angry. For that person, such a request can be perceived as a lack of faith in the relationship and the hopes and dreams you both share for the future. For the person doing the asking, such an agreement is a practical tool for designing and clarifying your financial relationship rather than letting the state do it for you.
Pre-marital or post-marital agreements can protect both spouses. The most common scenario is a second marriage for at least one of the parties who has assets to protect. If that person brings sole and separate property to a marriage and does not mix it with community property, there will never be a claim on it, but identifying it in a pre-marital agreement may help clarify what is sole and separate in the event of a divorce. Such agreements may be also used to memorialize a mutual understanding regarding financial responsibilities for children from a previous marriage.
Pre-marital or post-marital agreements are vulnerable to challenge because of the close relationship of the parties involved and the emotional dynamics that may be a part of such a negotiation at the agreements are being written. To avoid claims of undue influence, incompetency, unfairness, among other issues, it is critically important that all assets and obligations are disclosed and that each party be represented by counsel. Additionally, it is good practice to have each attorney sign an acknowledgement of representation on the actual agreement.
Besides sorting out the sole and separate property and debt, there are other common issues often addressed in pre-martial and post-marital agreements:
- How are you going to manage your income? Will there be a Joint account for the community expenses? If so, how will that be funded and, specifically, what will that be used for? Will there be an allowance paid to one spouse? Are both spouses going to work? Will each spouse’s income be considered sole and separate rather than community?
- How are you going to manage debt? Is someone bringing debt into the marriage? If it is paid off by the community or the other party, will that be acknowledged in the event of a divorce?
- How are you going to manage the marital home? Is the home owned by one of the spouses? Is it going to be joint titled? Is one spouse putting a down payment on a new home from his or her sole and separate assets? Is the new home going to be joint-titled? If so, how are you going to sort that out in the event of a divorce? How about the household furnishings? What is sole and separate and what is going to be community?
- What are the expectations in the relationship? If one spouse has more income than the other, is there a plan for support in the event of a divorce? Does the amount of support increase depending on the length of the marriage? Is there no support? What are the expectations of the relationship -- children, stay at home mom, continued pursuit of mutual careers? Are there children from another relationship and commitments for child support and spousal support to an ex-spouse?
- How about life insurance, wills, trusts? What is the plan in the event of the death or disability of one of the spouses?
Mediation can be used very effectively with parties who want a pre-marital or post-marital agreement. The mediator/attorney can draft the agreement and send both parties out for independent legal advice or the mediator/attorney can be hired as an attorney for one of the parties, meet with both to discuss the terms of the agreement, draft the agreement and refer the unrepresented party to another attorney for independent legal advice.